At the Beginning of the Current Year, Both Doug and Amelia

question 170

Multiple Choice

At the beginning of the current year, both Doug and Amelia each own 50% of Amaryllis Corporation (a calendar year taxpayer) . In July, Doug sold his stock to Kevin for $140,000. At the beginning of the year, Amaryllis Corporation had accumulated E & P of $240,000 and its current E & P is $280,000 (prior to any distributions) . Amaryllis distributed $300,000 on February 15 ($150,000 to Doug and $150,000 to Amelia) and distributed another $300,000 on November 1 ($150,000 to Kevin and $150,000 to Amelia) . Kevin has dividend income of:

• A) $150,000.
• B) $140,000.
• C) $110,000.
• D) $70,000.
• E) None of these.

Understand the basic forms of business organization, including sole proprietorship, partnership, and corporations.

Recognize the role and responsibilities of a managing partner in a law firm.

Identify the tasks and functions of paralegals within different business forms, especially in sole proprietorships.

Distinguish between various forms of law firm organization, such as sole proprietorships, partnerships, and professional corporations.

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Definitions:

Market Rate

The current price at which an asset or service can be bought or sold in the marketplace.

Present Value

The amount of money that, if invested today, would grow to a designated future amount. Discounted value of future cash flows.

Straight-Line Depreciation

Depreciation method in which the amount taken to depreciation expense each year is constant and equal to 1/n times the depreciable amount, where n is the depreciable life of the asset.