1. If the transferors are in control of the corporation,immediately after the transfer,No gain or loss is recognized when property is transferred to a corporation only in exchange for stock.
   Section 351(a)
   Control is defined in Section368(c) as ownership of at least 80% of the voting stock and at least 80% of all other classes of stock.
2. Corporation's basis is the same as transfer's basis.

• C Corparation's Form 1120 =>Due date:15th day of the 3rd month after the close of its tax year
• Estimated Payments
  • quarterly estimated tax payments($500 or more tax liabilities)
  • due on the 15th day of the 4th,6th,9th,,12th month of the tax year
  • A tax delinquency penalty(0.5%/month,max25%)
    when failed to pay less than 90% of tax

• Organizational Expenses
  • amortazation within 60 month
  • costs related to the issuance of stock are not organizational cost

% of ownership by corporate shareholder	deduction %
Less than 20 %	70 %
20 % - 80 %	80 %
80 % -	100 %

• Premium are NOT deductable
• Proceed are NOT Included

• Limited to 10 % of taxable income
• May be carried forward for 5 years

Capital Gains & Losses
• Capital Losses are deductable only against capital gains
• May be carried back 3 years & carried forward 5 years
• carried back or forward capital losses are treated as short-term capital losses

  	Individual	Corporate
  deductability with other income	$3,000/year	no
  carry forward	no limitation	5 years
  carry back	no	3 years

NOL[Net Operating Loss]
• May be carried back 2 years and forwarded 20 years

• Adjustments
  • +Long-term contracts
  • +Installment sales of certain property
  • +Excess depreciation of post-1986 real property over SL[Straight-line].
  • +Basis adjustment in determining gain or loss from the sale or exchange of property
  • +Passive activities
  • +Certain loss limitation
• Preference
  • +% depletion
  • +Tax-exempt interest from private activity bonds isuued after August 7,1986
  • +Appreciated property given to charity
  • Intangible drilling cost
  • Accelerated depreciation on pre-1987 property

• ACE[Adjusted Current Earnings]

  AMTI = AMTI + (ACE - AMTI)*75%

  ACE = AMTI +
  • Municipal interest income
  • +Dividend-received deduction(under 20% ownership)
• Exemption
  $40,000
  1. Phaseout

     25%*(MTI[Minimum Taxable Income]-$150,000)

  2. zero exemption:$310,000

• Reconciliation of Book Income to Taxable Income

• E&P[Earnings and Profits]
  Taxable Income
  • +Tax-exempt income
  • +Key-man life insurance proceeds
  • +Charitable contributions deduction carried over from previous year
  • +Percentage depletion
  • +Accelerated depreciation greater than SL
  • +Deferred gain on an installment sale
  • +Intangible drilling costs deducted currently
  • +Mine exploration & development cost
  • -Federal income taxes
  • -Loss on sale between related parties
  • -Key-man life insurance premiums
  • -Charitable contributions made in excess of 10% taxable income limitation

• Exempt corporations
  • S Corporation
  • personal holding company
  • tax-exempt organization
  • passive foreign investment company
• Amount to allow accumulation
  • $250,000

    $150,000 for certain service corporation

  • +dividends paid during 2.5 months of the tax year
  • -accumulated E&P at the close of the preceding tax year
• Tax rate => 39.6%

Criteria
• The Gross Income Test

  60% AOGI[adjusted ordinary gross income] consists of certain PHC income[passive income].

• The Stock Ownership Test

  50 % outstanding stock owned by 5 individuals at any time during the last half of the year

• Tax rate =. regular corporate tax + 39.6%

1. Type A

   A+B -> A

2. Type B

   A+B -> A+B

3. Type C
4. Type D
5. Type E
6. Type F
7. Type G