25 May Question 115.Estela, Inc., a calendar year S corporation, incurred the following items in 2014.
Question
115.Estela, Inc., a calendar year S corporation, incurred the following items in 2014.
| Municipal bond interest | $ 7,000 |
| Sales | 120,000 |
| Depreciation recapture income | 14,000 |
| Long-term capital gain | 20,000 |
| Cost of goods sold | (42,000) |
| Administrative expenses | (15,000) |
| Depreciation expense | (13,000) |
| Charitable contributions
Calculate Estela’s nonseparately computed income. |
(10,000) |
116. Towne, Inc., a calendar year S corporation, holds AAA of $627,050 at the beginning of 2014. During the year, the following items occur.
| Sales income | $216,000 |
| Loss from real estate operations | (4,000) |
| Officers’ life insurance proceeds | 100,000 |
| Premiums paid for officers’ life insurance | (3,600) |
| Dividend income | 17,000 |
| Interest income | 3,000 |
| Charitable contributions | (22,000) |
| § 179 depreciation expense | (2,500) |
| Administrative expenses | (35,000) |
| Cash distributions to shareholders | (73,220) |
| Calculate Towne’s ending AAA balance. |
117. Bidden, Inc., a calendar year S corporation, incurred the following items.
| Sales | $130,000 |
| Depreciation recapture income | 12,000 |
| Short-term capital gain | 30,000 |
| Cost of goods sold | (42,000) |
| Municipal bond interest income | 7,000 |
| Administrative expenses | (15,000) |
| Depreciation expense | (17,000) |
| Charitable contributions | (14,000) |
| Calculate Bidden’s nonseparately computed income. |
118. Gene Grams is a 45% owner of a calendar year S corporation during 2014. His beginning stock basis is $230,000, and the S corporation reports the following items.
| Ordinary income | $72,000 |
| Short-term capital gain | 16,000 |
| § 1231 loss | 6,000 |
| Tax-exempt interest income | 5,000 |
| Calculate Grams’s stock basis at yearend. |
119. Chris, the sole shareholder of Taylor, Inc., elects during 2014 to terminate the S election, effective January 1, 2015. As of the end of 2014, Taylor, Inc., holds AAA of $120,000 and OAA of $13,000. Chris receives a cash distribution of $130,000 on January 15, 2015. If his stock basis is $220,000 before the distribution, calculate Chris’s taxable amount and his ending stock basis.
120. Individuals Adam and Bonnie form an S corporation, with Adam contributing cash of $100,000 for a 50% interest, and Bonnie contributing appreciated ordinary income property with an adjusted basis of $20,000 and a fair market value of $100,000.
a. Determine Bonnie’s initial basis in her stock, assuming that she receives a 50% interest.
b. The S corporation sells the property for $120,000. Determine Adam’s and Bonnie’s stock basis after the sale.
c. Determine Adam’s and Bonnie’s gain or loss if the company is liquidated.
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