Use the following data for Questions 6-11Frank, Sara, and Gilbert form FSG Services, Ic., an S corporation, by contributing the following properties:ShareholderPropertyBasisValueFrankCash150,000150,000SaraCash80,00080,000GilbertLiability on building contributed by Gilbert assumed by corporationEquipmentLand and Building40,000220,00070,000300,000100,000The three shareholders above own 30%, 30%, and 40% of the corporation respectively. Sara also loans the corporation $50,000 and the debt is evidenced by an executed corporate note.During the year, the corporation earns ordinary operating income before officer salaries of $400,000. Frank, Sara, and Gilbert earn officer salaries of $20,000, $100,000, and $140,000 respectively. In addition to these payments, each shareholder also takes a $20,000 cash distribution duringthe year.What is Frank's basis for his stock at formation?What is Sara's basis in stock at formation?What is Gilbert's basis in stock at formation?What is Sara's basis for absorbing pass-through losses at formation?What is Gilbert's stock basis after the first year?Refer to the data above. Assume that after two years, the corporation decides to sell the building contributed by Gilbert that it has used for its operating space during the first two years. The basis of the building at the time of sale is S200,000 and the net sales price received is $360,000(part in cash and part for the buyer's assumption of the remaining liability). At the time of the sale, Gilbert's stock basis is $320,000. What is Gilbert's stock basis after adjusting for the sale of the building? (REMEMBER, UNLIKE PARTNERSHIPS, S CORPORATIONS DO NOTPERFORM SPECIAL ALLOCATIONS OF TAXABLE INCOME AMONG THEIR SHAREHOLDERS TO COMPENSATE FOR BUILT-IN GAINS!)Use the following data for Questions 12-14Malcolm is an S corporation shareholder with a $120,000 basis in his stock. Malcolm owns 20% of the corporation. The corporation decides to redeem Malcolm's interest by distributing to him $140,000 of securities with a basis to the S corporation of $100,000.As a result of this decision, what is Malcolm's basis in his S corporation stock immediately prior to receiving these securities? NOTE: Assume there are two steps here: the corporation's distribution of the securities and the shareholder's receipt of them. This questionaddresses the first step and #13 addresses the second step.Refer to the data for Question #12. What is Malcolm's gain or loss on receiving the securities in redemption of his S corporation stock?Refer to the data for Question #12. What is his basis in the securities received in full redemption of his stock?

Name: Use the following data for Questions 6-11Frank, Sara, and Gilbert for
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Description: Use the following data for Questions 6-11Frank, Sara, and Gilbert form FSG Services, Ic., an S corporation, by contributing the following properties:ShareholderPropertyBasisValueFrankCash150,000150,000SaraCash80,00080,000GilbertLiability on building

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Answered: 220,000 is evidenced by an executed…

Business

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220,000 is evidenced by an executed corporate note. alaries of $20.000, $100,000, and $140.,000 respectively. In addition to these payment

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter18: Corporations: Organization And Capital Structure

Section: Chapter Questions

Problem 31P

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