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assets is $725,000, whereas the total amount of its outstanding
debt amounts to
$950,000. Silver Fox Corporation has been engaged in the resale
of tax preparation and
tax research-related books and software for several years.
a. At the time of the bankruptcy, Silver Fox is owned by Randall,
who purchased the
stock from an investor for $250,000 several years ago. Randall is
single. What are the
amount and character of the loss sustained by Randall upon
Silver Fox’s bankruptcy?
b. How would your answer to part a change if Randall originally
organized Silver Fox
Corporation, capitalizing it with $250,000 of cash and assuming
Silver Fox qualifies as
a small business corporation?
c. How would your answer to Part a change if Randall were a
corporation instead of an
individual?
d. How would your answer to Part b change if Randall were a
corporation instead of an
individual?
Problem C3-38
Charitable Contribution Deduction Limitation. Zeta Corporation
reports the following
results for 2006 and 2007:
Adjusted taxable income $180,000 $125,000
Charitable contributions (cash) 20,000 12,000
The adjusted taxable income is before Zeta claims any charitable
contributions deduction,
NOL or capital loss carryback, dividends-received deduction, or
U.S. production
activities deduction.
a. How much is Zeta’s charitable contributions deduction in
2006? In 2007?
b. What is Zeta’s contribution carryover to 2008, if any?
Problem C3-58