Corporate Tax Final Exam Prep 2022 with complete solution
Question 2
Family Stock Attribution Rules... (ch 6)>> ...
What is stock redemption->> when a corporation acquires its stock from a shareholder in exchange
...
Corporate Tax Final Exam Prep 2022 with complete solution
Question 2
Family Stock Attribution Rules... (ch 6)>> ...
What is stock redemption->> when a corporation acquires its stock from a shareholder in exchange for cash or other property.
To qualify for sale or exchange treatment, a stock redemption generally must result in what?>> A substantial reduction in the shareholders ownership interest in the corporation.
In determining whether a stock redemption has sufficiently reduced a shareholders interest, what information must be examined?>> If the stock owned by certain related parties is attributed to the redeeming shareholders.
(if so, their ownership may not have been reduced adequately)
Attribution Rules->> the application of constructive ownership rules to assign to one taxpayer the interest of another taxpayer.
Under the attribution rules, what family members are considered to be related parties?
"An individual is deemed to own the stock owned by his or her:">> Spouse
Children
Grandchildren
Parents
(2 tiers Down)
(1 tier up)
Quiz Question:
Old Grandad founded family corp and still owns 75% of the stock. The rest is owned by you and your 4 siblings individually ( you each own 5%). Applying family attribution rules, what percentage are YOU treated as owning and why?>> You, the grandson, own 5%.
You own 5% because an individual is only attributed ownership of stock they dont directly own, if the related party in ownership of the stock is a spouse, child, grandchild, or parent.
In this case, your grandparent owns 75%. Attribution rules do not apply to you.
Question 3
2-2D
Net Capital Loss....
What can a corp do with net capital losses?>> ....
How do capital gains and losses occur?>> as a result of the taxable sale or exhcange of capital assets.
What is the netting procedure for capital gains/losses.>> Short term gains net with short term losses.
Long term gains net with long term losses.
(If both short term and long term create loss/gain, no additional netting required.)
(If one is a gain, and the other a loss, further netting is done against each to get a single figure)
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