Ian Contributes $9,000 in Exchange for a 30 Percent Interest

question 76

Multiple Choice

Ian contributes $9,000 in exchange for a 30 percent interest in a C corporation.For 2018, the corporation reported a total loss of $35,000 and made no cash distributions.For 2019, the corporation reported net income of $45,000 and made a cash distribution to the shareholders.Ian received $5,000 of this cash distribution in 2019.Ian is in the 24% marginal tax bracket and 15% dividend rate in both 2018 and 2019.How much income tax did Ian save for 2018 as a result of his share of loss from this corporation and how much income tax does Ian pay as a result of his ownership in the corporation for 2019?

• A)zero tax savings in 2018 and $750 tax in 2019
• B)zero tax savings in 2018 and $3,360 tax in 2019
• C)$2,520 tax savings in 2018 and $3,360 tax in 2019
• D)$2,520 tax savings in 2018 and $2,550 tax in 2019
• E)$2,940 tax savings in 2018 and $3,780 tax in 2019

---

Definitions:

Unbiased

Lacking prejudice or favoritism; fair and impartial.

Categorizing

The process of sorting or arranging objects, ideas, or information into groups based on shared characteristics.

Psychophysiological Measure

Methods used to study the relationship between physiological processes and psychological states through the measurement of physical responses, such as heart rate or brain activity.

Neuroimaging Techniques

Various methods used to visualize the structure and function of the brain and nervous system, such as MRI and PET scans.