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Urgent: I need the answers in 45 minutes. Is this possible?1. XYZ Company had a net loss of $90,000 from operations in 2007. Tina owns XYZ and works 20 hours a week in the business. She has a large amount of income from other sources and is in the 33% marginal tax bracket. Would Tina's tax situation be better if XYZ were a proprietorship or a C-corporation? Explain why.2. Sara owns a sole proprietorship and Phil is the sole shareholder of a C (regular) corporation. Each business sustained a $9,000 operating loss and a $2,000 capital loss for the year. Evaluate how these losses will affect the taxable income of the two owners?3. Kyle forms a corporation and transfers property having a basis to him of $20,000 and a fair market value of $30,000 to the corporation for 1,000 shares of $9 par stock. One year later, Bob transfers property having a basis to him of $2,000 and a fair market value of $4,000 for 100 shares of the stock. Bob is not related to Kyle. The corporation issued no other stock. a. How much gain does Kyle recognize on his exchange? What is the basis to Kyle of his 1,000 shares?b. How much gain does Bob recognize on his exchange? What is the basis to Bob of his 100 shares?c. What gain or loss is recognized by the corporation when it issues its shares to Kyle? What is the basis to the corporation of the property it received from Kyle? 4. Leon sold a piece of business equipment that had an adjusted basis to him of $40,000 for $65,000 cash plus artwork that had a fair market value of $15,000. The buyer assumed Leon's $20,000 loan on the equipment. Leon paid $3,000 in selling expenses. a. Identify and describe the general formula for calculating the adjusted basis of property. b. What is Leon's recognized gain? 5. Shareholders in closely held C-corporations often pay themselves large salaries in order to avoid double taxation on corporate income. a. Briefly explain the double taxation problem and how paying large salaries to owners avoids it. b. Briefly discuss how the reasonable compensation issue applies to S-corporations. c. Briefly discuss the IRS s position on reasonable compensation for owner-employees of closely held C-corporations.
