11-39Allocation of Income to Shareholders. ToylandCorporation, an S corporation, uses the calendaryear as its tax year. Bob, Alice, and Carter own60, 30, and 10 shares, respec-tively, of theToyland stock. Carter's basis for his stock is$26,000 on January 1 of the current year(assume a non-leap year). On June 30, Alicegifted one-half of her stock to Mike. OnNovember 30, Carter sold his stock to Mike for$45,000. Toyland reports the following resultsfor the current year:Ordinary incomeLong-term capital loss Charitable contributions$120,000 10,000 6,000a. What amount of income, loss, or deduction dothe four shareholders report (assuming thecorporation makes no special allocationelection)?b. What gain or loss does Carter recognize whenhe sells the Toyland stock?

The term S corporation stands for Small Business Corporation. It is considered to be an ordinary…

Answered: 11-39 Allocation of Income to…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(1) Carol owns 4,000 shares of the stock of ABC Corporation. In 2019, in exchange for some of her shares, Carol receives a check for $400,000. Her basis in her entire interest in ABC Corp was equal to $1,000,000, and her adjusted basis of the exchanged shares is equal to $250,000. ABC had $1,200,000 of Earnings & Profits as of the end of the 2019 tax year. In 2018, Carol sustained stock market losses equal to $175,000 and has a LTCL carryover to 2019 equal to $172,000. (a) Assuming she has no other items of income or loss in 2019 and does not itemized her deductions, what are the tax consequences to Carol if the redemption of her shares does not qualify for sale or exchange treatment under §302? The tax consequence (b) Assuming she has no other items of income or loss in 2019 and does not itemized her deductions, what are the tax consequences to Carol if the redemption of her shares does qualify for sale or exchange treatment under §302?
The allwardt trust is a simple trust that correctly uses the calander year for tax purposes. It's income beneficiaries (Lucy and Ethel) are entitled to the trusts annual accounting income it shares of one-half each. For the current tax year, allwardt reports the following. Ordinary income $585,000. Long-term capital gains, allocated to corpus $175,500. Legal and accounting fees, allocated to corpus $29,250. What is the trusts DNI? What is the trusts taxable income? How much gross income is reported by each of the beneficiaries?
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Stacey and Andrew each own one-half of the stock in Parakeet Corporation, a calendar year taxpayer. Cash distributions from Parakeet are: $350,000 to Stacey on April 1 and $150,000 to Andrew on May 1. If Parakeet’s current E&P is $560,000, how much is allocated to Andrew’s distribution? a. $5,000b. $10,000c. $18,000d. $30,000e. None of the above. Please explain the calculation needed, thank you!
A24. At the beginning of the tax year, Barnaby's basis in the BBB Partnership was $182,600, including his $18,260 share of partnership debt. At the end of the tax year, his share of debt was $27,390. His share of the partnership's income for the year was $73,040, and he received cash distributions totaling $45,650. In addition, his share of the partnership's nontaxable income was $3,652. How much is Barnaby's basis at the end of the tax year?
Carl contributes equipment with a $50,000 adjusted basis and an $80,000 FMV to cook Corporation for 50 of its 100 shares of stock. His son Carl Jr. contributes $20,000 cash for the remaining 50 Cook shares. What tax issues regarding the exchanges should carl and his so consider?
Noelle, the owner of all of the shares of ClockCo, an S corporation, transfers her stock to Grayson on April 1. ClockCo reports a $70,000 NOL for the entire tax year, but $10,000 of the loss occurs during January-March. Assume 365 days in a year. Round per day computation to five decimals places. Round final answers to the nearest dollar. a. Without a short-year election, $fill in the blank 1 of the loss is allocated to Noelle, and $fill in the blank 2 is allocated to Grayson.
Allie gifted 100 shares of Fieri stock to Jim. Allie (the donor) had a basis in the stock of $55 per share and had held the stock for more than two years prior to the gift. At the time of the gift, the FMV of each share was $40. What are the tax consequences to Jim if he sells the stock two years after the date of the gift for $48 per share? $700 loss $800 gain $1,500 gain No gain or loss
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On November 15, 2019, Tim, a cash basis taxpayer, gave his Daughter Nancy 1000 shares of JP Morgan common stock, which Tim purchased on June 30, 2015 for $60,000. On the date of the gift the stock was selling on the NY Stock Exchange for $46 per share. On December 03, 2019, the corporation declared a 1 for 1 stock dividend payable on December 10, 2019, to shareholders of record as of November 22, 2019. On January 17, 2020, Nancy sold 1,500 shares of JP Morgan common stock that she received from her father and from the stock dividend for $18 per share. a) What is Nancy’s recognized gain or loss on the sale of the 1,500 shares on January 17, 2020? b) What is Nancy’s total basis in the remaining shares? Explain your answer and show all calculation.

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