Question

1. VanVoorst Realty, Inc. a real estate brokerage firm and calendar year C Corp, had the following income and expenses:

Commissions income          150,000

Commission Expense to non-brokers

(illegal under state law) 10,000

Commission Expense to legal brokers   9,500

Travel and Transportation 12,000

Supplies   5,000

Office Rent 10,500

Bribes to zoning commissioners   2,500

How much taxable income must VanVoorst Realty, Inc. report from this business?

2. Annika sold stock in IBM Corporation (basis of $80,000) to her brother Daniel for $30,000, the stock’s FMV.

1. What are the tax consequences to Annika?
2. What are the tax consequences to Daniel if he sells the stock to an unrelated party for $110,000? For $40,000? For $75,000?

Answer 1