me me Tax Liability Paid Interest Income
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter18: Comparative Forms Of Doing Business
Section: Chapter Questions
Problem 16P
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Question
Transcribed Image Text:PART 1: Nomad Corporation (a calendar year, accrual basis taxpayer) had the following
transactions in 2021:
Taxable Income
$295,000
Federal Income Tax Liability Paid
69,300
Tax-Exempt Interest Income
3,000
Excess of Capital Loss over Capital Gains
7,000
Section 179 Expense elected in 2021
15,000
Dividends Received from Domestic Corporation (less than
40,000
20% owned)
MACRS Depreciation deduction
18,000
Straight-line depreciation using ADS class lives
10,000
Compute Nomad's E & P for tax year 2021
PART 2: On June 30th, Nomad Corporation distributes $100,000 to Jack and Jill, who each own
50% of the corporation. At the beginning of the current year, Nomad corporation has a deficit in
accumulated E&P of $(53,000). Using the figure for current E&P that you calculated for Nomad
Corporation, determine the tax treatment of distribution for the shareholders. (assume each
shareholder has adequate basis in the corporation).
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