Problem 1: Jeff is the sole shareholder of a C corporation. In 2006, the corp sold a capital asset for a gain of $20000. Jeff is required to report the capital gain on his individual income tax return for 2006 & the gain is subject to a maximum rate of 15%.
Problem 2: Ramon owns a 30% interest in a partnership that earned $100000 in the current year. He also owns 30% of the stock in an S corporation that earned $100000 during the year. The partnership did not make any distributions, & the corp distributed $20000 to him. Ramon must pay income tax on $60,000 of income.
Problem 3: Wolf Enterprises, a partnership had a capital loss of $20000 during the year. Matt, who owns 50% of Wolf, may report $10000 of Worlf's capital loss on his individual Federal income tax return (Form 1040).
Multiple Choice:
Geneva, a sole proprietor, sold one of her non-depreciable business assets for a $20000 long-term capital gain. Geneva's marginal tax rate is 35%. Gulf Corporation sold one of its assets for a $20000 long-term capital gain. Gulf's tax rate is 35%. What tax rates are applicable for these capital gains?
A. 15% rate applies to both
B. 15% rate to Geneva & 35% to Gulf
C. 15% rate to Gulf & 35% to Geneva
D. 35% to both
E. None of the above