25 May Question 115.You are a 60% owner of an S corporation. Calculate your ending stock ba
Question
115.You are a 60% owner of an S corporation. Calculate your ending stock basis, based upon these facts.
| Beginning stock basis | $52,600 |
| Purchases of additional stock | 15,000 |
| Insurance premiums paid (nondeductible) | 3,600 |
| Tax-exempt interest income | 5,230 |
| Payroll tax penalty | 3,770 |
| Increase in AAA | 22,400 |
| Increase in OAA | 5,800 |
116. On December 31, 2014, Erica Sumners owns one share of an S corporation’s 10 outstanding shares of stock. The basis of Erica’s share is $300. During 2015, the S corporation incurs a loss of $3,650. Determine the amount of the loss allocated to Erica, and calculate her stock basis at the end of 2015.
117. Alomar, a cash basis S corporation in Orlando, Florida, holds the following assets and liabilities on January 1, 2014, the date the S election is made.
|
Cash
Accounts receivable Equipment
Land
Accounts payable
During 2014, Alomar collects the accounts receivable and pays the accounts payable. The land is sold for $3 million, and the taxable income for the year is $590,000. Calculate any built-in gains tax.
118. Pepper, Inc., an S corporation in Norfolk, Virginia, has revenues of $400,000, taxable interest of $380,000, operating expenses of $250,000, and deductions attributable to the interest income of $140,000. Calculate any passive investment income penalty tax payable by this corporation.
119. Discuss two ways that an S election may be terminated.
120.Advise your client how income, expenses, gain, and losses are allocated to shareholders of an S corporation.
121. Explain the OAA concept.
122. Discuss the two methods of allocating tax-related items to S corporation shareholders.
123. Compare the distribution of property rules for an S corporation with the corresponding partnership rules.
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