ACC 455 Week 3

Learning Team Week Three Problem Set

Complete the problems found in Ch. 3 & 5 of Prentice Halls Federal Taxation 2010: Corporations with your Learning Team.

C:3-3 Discussion Question Case Scenario on Tax Elections (Ch. 3)

C:5-8 Discussion Question Identify Items as AMT Adjustment or Preference (Ch. 5)

C:3-37 Problem Charitable Contributions of Property (Ch. 3)

Read the scenario and respond to the questions.

Support your answers with calculations, as needed.

Show your work.

Submit your completed assignment as a Microsoft Excel, a Microsoft Word, or a PDF document.

Discussion Questions

How does a corporation compute earnings and profits (E&P)? What income is deferred to a later year when computing taxable income but is included in E&P in the current year? What deductions are allowed for taxable income purposes but denied for E&P?

The corporation owns a building with a $160,000 adjusted basis and $120,000 fair market value. The company has earnings and profits of $200,000. Is it more advantageous for the company to sell the property and distribute the sales proceeds to its shareholders or distribute the property to its shareholders and let them sell the property? Why? If you were a shareholder, what would be most advantageous to you

What is a stock redemption? What are some reasons for redeeming stock? Why are some redemptions treated as sales and others as dividends?