Linda and Richard are married and file a joint return for 2010

Linda and Richard are married and file a joint return for 2010. During the year, Linda, who works as an accountant for a national airline, used $2,100 worth of free passes for travel on the airline; Richard used the same amount. Linda and Richard also used $750 worth of employee discount coupons for hotel rooms at the hotel chain that is also owned by the airline. Richard is employed at State University as an accounting clerk. Under a tuition reduction plan, Richard saved $1,000 in tuition fees during 2010. He is studying for a master's degree in business. Richard also had $30 worth of personal typing done by his secretary at the University.

What is the amount of fringe benefits that should be included in Linda and Richard’s gross income on their 2010 tax return?


Click here for the solution: Linda and Richard are married and file a joint return for 2010

On February 1 of year 1, Richard, Mike, Patrick, and Sean form Brothers Corp and transfer the following items

Problem 2-2 On February 1 of year 1, Richard, Mike, Patrick, and Sean form Brothers Corp and transfer the following items: Property Transferred Transferor Asset Basis to Transferor FMV Number of Common Shares Issued Richard Land 12000 30000 400 Building 38000 70000 Mortgage on Land and Building 60000 60000 Mike Machines 25000 40000 300 Patrick Truck 15000 10000 50 Sean Legal Services 0 10000 100 Richard purchased the building and land several years ago, $50,000 for the building, and $12,000 for the land. Depreciation has been claimed using the straight line method. In addition to the machines, Mike received a note from Brothers corp. due in 3 years for $10,000 at the market interest rate. Mike originally purchase the machines 3 years ago for $50,000. In addition to the truck, Patrick received a cash payment of $5,000. Patrick’s truck is 2 years old with an original price of $20,000.

(a) Does the transaction meet the requirements of section 351?
(b) What are the amounts of the gains or losses recognized by Richard, Mike, Patrick, Sean, and Brothers?
(c) What is each shareholder’s basis in their Brothers stock? When does the holding period for the stock begin?
(d) What is Brothers’ basis in its property and services? When does the holding period for each property begin?

Click here for the solution: On February 1 of year 1, Richard, Mike, Patrick, and Sean form Brothers Corp and transfer the following items