Finance Question – Corporate Earnings, Distributions, Redemptions And Liquidations
| Transaction | Taxable Income Increase (Decrease) | E&P Increase |
| 1.0 Realized gain of $50,000 on involuntary
conversion of building ($30,000 of gain is recognized) |
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2. Mining exploration costs incurred on June 1 ofSave your time - order a paper!Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines Order Paper Nowthe current year; $24,000 is deductible from current-year taxable income |
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| 3. Sale of equipment to unrelated third party
for $300,000; basis is $200,000 (no election out of installment method; no payments are received in the current year). |
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| 4. Dividends of $35,000 received from 5%-owned
corporation, together with dividends received deduction (assume taxable income limit does not apply). |
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| 5. Domestic production activities deduction of
$55,000 is claimed in current year. |
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| 6. Section 179 expense deduction of $45,000 in current year. | ||
| 7. Impact of current-year section 179 expense
deduction for previous item in succeeding year. |
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| 8. MACRS depreciation of $80,000. ADS depreciation
would have been $88,000. |
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| 9. Federal income taxes paid in the current year of $52,000 |
