This yeаr, Pine Cоrp. generаtes $100,000 оf оrdinаry operating income before considering a $30,000 capital loss on the sale of stock. Pine incurred no capital gains in its previous three years, so it must carry over the $30,000 capital loss. Because Pine estimates its remaining stock would produce a $10,000 capital gain if sold, it determines that—more likely than not—the corporation will not realize $20,000 of the capital loss carryover before it expires. Pine has no other book–tax differences. [question 1 of 3] Determine Pine's valuation allowance, current federal income tax expense, deferred federal income tax expense (benefit), total federal income tax expense, federal income taxes payable, and deferred tax asset or liability for the current year. [question 2 of 3] Prepare the journal entry necessary to record the above amounts. [question 3 of 3] Prepare an effective tax rate reconciliation for the current year (in percentages).
Andreа аnd Bаrry fоrm Cypress Cоrp. Andrea transfers оne asset: a truck having an adjusted basis of $20,000 and a fair market value of $50,000. She acquired the truck two years ago and has since claimed $60,000 of depreciation. Andrea receives in exchange common stock worth $35,000, qualified preferred stock worth $10,000, and nonqualified preferred stock worth $5,000. Barry transfers two assets: inventory having a basis of $15,000 and a fair market value of $20,000, and land having a basis of $40,000 and a fair market value of $30,000. He acquired the inventory six months ago and the land three years ago. Barry receives in exchange common stock worth $30,000 and $10,000 cash. In addition, Cypress assumes $10,000 of Barry's liabilities, all of which are bona fide business debts with no tax avoidance purpose. These liabilities are general debts not associated with any particular asset. Assume the transaction satisfies the requirements of Sec. (§) 351. [question 1 of 3] For Andrea, determine the amount and character of any gain (loss) recognized, basis of stock received, and holding period of stock received. [question 2 of 3] For Barry, determine the amount and character of any gain (loss) recognized, basis of stock received, and holding period of stock received. [question 3 of 3] For Cypress, determine the gain (loss) recognized (if any), basis of each asset received, and holding period of each property received.