14. Is there any depreciation recapture under a Code Sec. 351 exchange? Under Code Sec. 351 if gain is recognized on the exchange because boot is received, it is characterized as ordinary income to the extent of depreciation recapture.
20. What tax years are available to corporations? How do the options differ from other forms of business organizations?
The two tax years available to corporations are fiscal or calendar. However other business forms, such a sole proprietorships or partnerships limited to filing the regular calendar year. However there is an opportunity which allows partners to use fiscal year. The tax year can be the one used by the partners with the most controlling interest. I have worked for numerous companies whose fiscal year ends March 31 vs. December 31. This again is the flexibility enjoyed by corporate entities.
22. What are the differences in the treatment of capital gains and capital losses of corporations and of individuals?
Corporations do not receive preferential treatment of net long-term capital games. Unlike individuals, corporations may not take a deduction for net capital losses in the year in which they occur. The net capital loss can never be used to reduce ordinary income. Corporate taxpayers can claim capital losses only against capital gains. Corporate capital loss carryovers become short-term losses regardless of their original status. They are carried back three years to offset net capital gains claimed in those years, or they can be carried forward five years.
55. Susan Sweets is a 40 percent shareholder in Acclaim Inc., a theatrical supplies company. She transfers a fully depreciated car with a value of $2,000 to the corporation, but does not receive any consideration for it. * a. What are the tax consequences to Susan?
There are no tax consequences because the client did not receive anything for the car.
* b. What are the tax consequences to the corporation?
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