Partnership Formation to Dissolution Timothy is a 35 percent partn.docx

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Partnership Formation to Dissolution Timothy is a 35 percent partner in the Total Partnership, a calendar-year-end entity. Timothy has an outside basis in his interest in Total of $198,000, which includes his share of the $45,000 of partnership liabilities. On December 31, Total makes a proportionate distribution of the following assets to Timothy: Basis FMV Cash $50,000 $50,000 Inventory 65,000 75,000 Land 50,000 65,000 Totals $165,000 $180,000 For an operating distribution, outline the tax consequences (amount and character of recognized gain or loss, basis in distributed assets) of the distribution to Timothy. For a liquidating distribution, outline the tax consequences (amount and character of recognized gain or loss, basis in distributed assets) of the distribution to Timothy. Discuss the similarities and differences between the tax consequences of the operating distribution and the tax consequences of the liquidation distribution. .

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Partnership Formation to Dissolution Timothy is a 35 percent partn.docx

Critical Thinking: Partnership Formation to Dissolution (100 Points) Timothy is a 35 percent partner in the Total Partnership, a calendar-year-end entity. Timothy has an outside basis in his interest in Total of $198,000, which includes his share of the $45,000 of partnership liabilities. On December 31, Total makes a proportionate distribution of the following assets to Timothy: Basis FMV Cash $50,000 $50,000 Inventory 65,000 75,000 Land 50,000 65,000 Totals $165,000 $180,000 For an operating distribution, outline the tax consequences (amount and character of recognized gain or loss, basis in distributed assets) of the distribution to Timothy. For a liquidating distribution, outline the tax consequences (amount and character of recognized gain or loss, basis in distributed assets) of the distribution to Timothy. Discuss the similarities and differences between the tax consequences of the operating distribution and the tax consequences of the liquidation distribution. .

Suppose in its income statement for the year ended June 30- 2025- The.pdf

pkishor303

Suppose in its income statement for the year ended June 30, 2025, The Clorox Company reported the following condensed data (dollars in millions). Assume a tax rate of 34% . Assume the marketing department has presented a plan to increase advertising expenses by $480 million. It expects this plan to result in an increase in both net sales and cost of goods sold of 20% . (Hint: Increase both sales revenue and sales returns and allowances by 20% .) (Assume a tax rate of 34% , and round all amounts to whole dollars.) Prepare a multiple-step income statement. Report Net Sales without explicitly showing Sales Revenue and Sales Returns and Depreciation Expense Advertising Expense Research and Development Expense Rent Expense Utilities Expense Total Operating Expenses Income From Operations Other Expenses and Losses Loss on Disposal of Plant Assets Interest Expense Income Before Income Taxes Income Tax Expense Net Income / (Loss) $.

Umling Expense ApportioningUmling

Understanding And Planning For UBIT

Brian T. Whitlock

19C H A P T E RC H A P T E RCorporations Distributions.docx

hyacinthshackley2629

19 C H A P T E RC H A P T E R Corporations: Distributions Not in Complete Liquidation L E A RN I NG O B J E C T I V E S : After completing Chapter 19, you should be able to: LO.1 Explain the role that earnings and profits play in determining the tax treatment of distributions. LO.2 Compute a corporation’s earnings and profits (E & P). LO.3 Determine taxable dividends paid during the year by correctly allocating current and accumulated E & P to corporate distributions. LO.4 Describe the tax treatment of dividends for individual shareholders. LO.5 Evaluate the tax impact of property dividends by computing the shareholder’s dividend income, basis in the property received, and the effect on the distributing corporation’s E & P and taxable income. LO.6 Recognize situations when constructive dividends exist and compute the tax resulting from such dividends. LO.7 Compute the tax arising from receipt of stock dividends and stock rights and the shareholder’s basis in the stock and stock rights received. LO.8 Identify various stock redemptions that qualify for sale or exchange treatment. LO.9 Determine the tax impact of stock redemptions on the distributing corporation. LO.10 Identify planning opportunities available to minimize the tax impact in corporate distributions, constructive dividends, and stock redemptions. CHA P T E R OU T L I N E 19-1 Corporate Distributions—Overview, 19-2 19-2 Earnings and Profits (E & P), 19-3 19-2a Computation of E & P, 19-3 19-2b Summary of E & P Adjustments, 19-6 19-2c Current versus Accumulated E & P, 19-6 19-2d Allocating E & P to Distributions, 19-6 19-3 Dividends, 19-10 19-3a Rationale for Reduced Tax Rates on Dividends, 19-10 19-3b Qualified Dividends, 19-11 19-3c Property Dividends, 19-12 19-3d Constructive Dividends, 19-15 19-3e Stock Dividends and Stock Rights, 19-18 19-4 Stock Redemptions, 19-19 19-4a Overview, 19-19 19-4b Historical Background, 19-22 19-4c Stock Attribution Rules, 19-22 19-4d Not Essentially Equivalent Redemptions, 19-23 19-4e Disproportionate Redemptions, 19-24 19-4f Complete Termination Redemptions, 19-25 19-4g Redemptions to Pay Death Taxes, 19-26 19-5 Effect on the Corporation Redeeming Its Stock, 19-28 19-5a Recognition of Gain or Loss, 19-28 19-5b Effect on Earnings and Profits, 19-28 19-5c Redemption Expenditures, 19-28 19-6 Other Corporate Distributions, 19-29 19-7 Tax Planning, 19-29 19-7a Corporate Distributions, 19-29 19-7b Planning for Qualified Dividends, 19-30 19-7c Constructive Dividends, 19-31 19-7d Stock Redemptions, 19-32 © De nn is Fl ah er ty /G et ty Im ag es ,I nc . Not For Sale © C en ga ge L ea rn in g. A ll rig ht s r es er ve d. N o di st rib ut io n al lo w ed w ith ou t e xp re ss a ut ho riz at io n. T H E B I G P I C T U R E Tax Solution s for the Real World TAXING CORPORATE DISTRIBUTIONS Lime Corporation, an ice cream manufacturer, has had a very profitable year. To share its profits with its two .

Financial management chapter 1 2-3

03135074749

Group assignment on Business Combinations

victor okoth

FOR SOLUTION OF THE BELOW CASE STUDIES, VISIT AND ASK IT AT ESSAYTUTORS.NET Group assignment on Business Combinations Case .1 You have been engaged to audit the financial statements of Solamente Corporation for thefiscal year ended May 31, 2010. You discover that on June 1, 2009, Mika Company hadbeen merged into Solamente in a business combination. You also find that both Solamenteand Mika (prior to its liquidation) incurred legal fees, accounting fees, and printing costsfor the business combination; both companies debited those costs to an intangible assetledger account entitled “Cost of Business Combination.” In its journal entry to record thebusiness combination with Mika, Solamente increased its Cost of Business Combinationaccount by an amount equal to the balance of Mika’s comparable ledger account. Instructions  Evaluate Solamente’s accounting for the out-of-pocket costs of the business combination with Mika in light of IFRS and GAAP guidelines. Case .2 You are the controller of Software Company, a distributor of computer software, which isplanning to acquire a portion of the net assets of a product line of Midge Company, a competitorenterprise. The projected acquisition cost is expected to exceed substantially the currentfair value of the identifiable net assets to be acquired, which the competitor has agreedto sell because of its substantial net losses of recent years. The board of directors of Softwareasks if the excess acquisition cost may appropriately be recognized as goodwill. Instructions  Prepare a memorandum to the board of directors an answer to the question, after consulting the guidelines issued by either FASB or IASB Case .3 On February 15, 2005, officers of Sun Corporation agreed with George Merlo, sole stockholderof Merlo Company and Merlo Industries, Inc., to acquire all his common stock ownershipin the two companies as follows: 1. 10,000 shares of Shane’s $1 par common stock (current fair value $30 a share) would be issued to George Merlo on February 28, 2005, for his 1,000 shares of $10 par common stock of Merlo Company. In addition, 20,000 shares of Sun common stock would be issued to George Merlo on February 28, 2010, if aggregate net income of Merlo Company for the five-year period then ended exceeded $300,000.

On July 1 2021 Truman Company acquired a 70 percent intere.pdf

aashisha5

On July 1, 2021, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $809,550 in cash and equity securities. The remaining 30 percent of Atlantas shares traded closely near an average price that totaled $346,950 both before and after Trumans acquisition. In reviewing its acquisition, Truman assigned a $126,000 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is anticipated to have a remaining life of five years. The following financial information is available for these two companies for 2021. In addition, the subsidiarys income was earned uniformly throughout the year. The subsidiary declared dividends quarterly. Truman Atlanta Revenues $ (725,470 ) $ (476,000 ) Operating expenses 414,000 315,000 Income of subsidiary (47,530 ) 0 Net income $ (359,000 ) $ (161,000 ) Retained earnings, 1/1/21 $ (916,000 ) $ (568,000 ) Net income (above) (359,000 ) (161,000 ) Dividends declared 140,000 70,000 Retained earnings, 12/31/21 $ (1,135,000 ) $ (659,000 ) Current assets $ 515,420 $ 338,000 Investment in Atlanta 832,580 0 Land 397,000 294,000 Buildings 755,000 662,000 Total assets $ 2,500,000 $ 1,294,000 Liabilities $ (865,000 ) $ (315,000 ) Common stock (95,000 ) (300,000 ) Additional paid-in capital (405,000 ) (20,000 ) Retained earnings, 12/31/21 (1,135,000 ) (659,000 ) Total liabilities and stockholders' equity $ (2,500,000 ) $ (1,294,000 ) What is the excess fair-value assigned to patent and goodwill? How did Truman allocate the goodwill from the acquisition across the controlling and noncontrolling interests? How did Truman derive the Investment in Atlanta account balance at the end of 2021? Prepare a worksheet to consolidate the financial statements of these two companies as of December 31, 2021. At year-end, there were no intra-entity receivables or payables..

Exercise 11-5 Garcia Corporation recently hired a new accountant with extensive experience in accounting for partnerships. Because of the pressure of the new job, the accountant was unable to review what he had learned earlier about corporation accounting. During the first month, he made the following entries for the corporation’s capital stock. May 2 Cash 108,080 Capital Stock 108,080 (Issued 7,720 shares of $10 par value common stock at $14 per share) 10 Cash 516,630 Capital Stock 516,630 (Issued 10,130 shares of $15 par value preferred stock at $51 per share) 15 Capital Stock 9,360 Cash 9,360 (Purchased 780 shares of common stock for the treasury at $12 per share) On the basis of the explanation for each entry, prepare the entries that should have been made for the capital stock transactions. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Exercise 11-7 On October 31, the stockholders’ equity section of Pele Company’s balance sheet consists of common stock $361,200 and retained earnings $414,400. Pele is considering the following two courses of action: (1) Declaring a 6% stock dividend on the 90,300 $4 par value shares outstanding (2) Effecting a 2-for-1 stock split that will reduce par value to $2 per share. The current market price is $17 per share. Prepare a tabular summary of the effects of the alternative actions on the company’s stockholders’ equity and outstanding shares. Pele Company’s Balance Sheet Before Action After Stock Dividend After Stock Split Stockholders’ equity Paid-in capital $ $ $ Retained earnings Total stockholders’ equity $ $ $ Outstanding shares Broadening Your Perspective 11-1 The stockholders’ equity section of Tootsie Roll Industries’ balance sheet is shown in the Consolidated Statement of Financial Position. (Note that Tootsie Roll has two classes of common stock. To answer the following questions, add the two classes of stock together.) TOOTSIE ROLL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF Earnings, Comprehensive Earnings and Retained Earnings (in thousands except per share data) For the year ended December 31, 2011 2010 2009 Net product sales $528,369 $517,149 $495,592 Rental and royalty revenue 4,136 4,299 3,739 Total revenue 532,505 521,448 499,331 Product cost of goods sold 365,225 349,334 319,775 Rental and royalty cost 1,038 1,088 852 Total costs 366,263 350,422 320,627 Product gross margin 163,144 167,815 175,817 Rental and royalty gross margin 3,098 3,211 2,887 Total gross margin 166,242 171,026 178,704 Selling, marketing and administrative expenses 108,276 106,316 103,755 ...