Learn: Tax exam 1 formulas

Adjusted basis

Cost - accumulated depreciation

Gain Realized

FMV or sales price - adjusted basis

1245 Recap

Min(Gain realized, Depriciation taken)

291 Recap (1250)

20% * Hypothetical 1245 recap

163 interest limit

30% * EBITDA

DRD

Dividend * DRD%

DRD Taxable income limit

Taxable income before DRD * DRD%

351 realized gain

FMV Received - Basis transferred

351 recognized gain with boot

Min (Realized gain, boot)

357c gain (When liabilities exceed basis)

Liab. Assumed - basis transferred

Shareholder stock basis

Old Basis + Gain recognized - boot - liab. asumed

Corporation basis in property

Transferor bais + Gain recognized

Failed 351 gain

FMV - Basis

Failed 351 shareholder stock basis

FMV of stock

Failed 351 corporate asset basis

FMV

Property distribution amount (amount of dist. to shareholder)

FMV - liab. assumed by shareholder

Shareholder basis in distributed property

FMV

311 corporate gain (Shows the corporation's gain when it distributes appreciated property)

FMV - corp. basis

Distribution order

Dividend, ROC, Capital Gain

Ending stock basis

Beginning basis - ROC (Shows the shareholder's remaining stock basis after a distribution.)

Current E&P

TI + or - E&P Adjustments

Corp. Tax rate

21%

NOL deduction limit

80% * TI before NOL (Max NOL deducition allowed this year)

Capital loss rules

Corporation = capital losses only against capital gains.

Individual = capital gains first, then up to $3,000 against ordinary income.

Passive Activity Losses

Closely held C corp = passive + active okay, not portfolio

PSC = passive only

if liabilities > basis

Recognize excess as a gain

When there is a boot what is the gain

Min (Realized gain, boot)

What can the stock basis not go below

0

DRD NOL Rule

If FULL DRD creates an NOL use the full thing

When can we net E&P

Negative current and Positve accumulated

Property Dist. Amount

FMV - Liab

Shareholder basis in distributed property

FMV

Corp. Distributing appreciated property

Recognize gain

Corporation distributing loss on property

NO LOSS

Kiab > FMV on distributed property

Use liability as a min. FMV for gain purposes

Distribution cannot

create an E&P deficet by itself

Qualified dividend

Must meet holding period rule

Constructive Div.

Salaries, loans, personal expenses can be reclassified as dividend