Exercise 22-19 (Algorithmic) (LO. 7) Vogel, Inc., an S corporation for five years, distributes a tract of land held as an investment to Jamari, its majority shareholder. The land was purchased for $71,800 ten years ago and is currently worth $179,500. If an amount is zero, enter, "0". a. As a result of the distribution, what is Vogel's recognized capital gain? How much is reported as a distribution to shareholders? Vogel recognizes a capital gain of $ a proportionate share of it passes through to the shareholders land. b. What is the net effect of the distribution on Vogel's AAA? There is a net decrease ✓of $ Vogel recognizes a loss $ would take a $ 107,700 ✓ which is reported on Schedule K, and ✓. Jamari would take a $ 71,800✔ on Vogel's AAA. c. Assume instead that the land had been purchased for $179,500 and was currently worth $71,800. How much would Vogel recognize as a loss? What would be the net effect on Vogel's AAA? What would be Jamari's basis in the land? Feedback 0✔and the net effect on Vogel's AAA is a decrease 71,800✔ basis in the land. 179,500✔ basis in the of $ 71,800 X. Jamari
Exercise 22-19 (Algorithmic) (LO. 7) Vogel, Inc., an S corporation for five years, distributes a tract of land held as an investment to Jamari, its majority shareholder. The land was purchased for $71,800 ten years ago and is currently worth $179,500. If an amount is zero, enter, "0". a. As a result of the distribution, what is Vogel's recognized capital gain? How much is reported as a distribution to shareholders? Vogel recognizes a capital gain of $ a proportionate share of it passes through to the shareholders land. b. What is the net effect of the distribution on Vogel's AAA? There is a net decrease ✓of $ Vogel recognizes a loss $ would take a $ 107,700 ✓ which is reported on Schedule K, and ✓. Jamari would take a $ 71,800✔ on Vogel's AAA. c. Assume instead that the land had been purchased for $179,500 and was currently worth $71,800. How much would Vogel recognize as a loss? What would be the net effect on Vogel's AAA? What would be Jamari's basis in the land? Feedback 0✔and the net effect on Vogel's AAA is a decrease 71,800✔ basis in the land. 179,500✔ basis in the of $ 71,800 X. Jamari
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Why is this not 71,800? What's the real answer?
Transcribed Image Text:Exercise 22-19 (Algorithmic) (LO. 7)
Vogel, Inc., an S corporation for five years, distributes a tract of land held as an investment to Jamari, its majority shareholder. The land
was purchased for $71,800 ten years ago and is currently worth $179,500.
If an amount is zero, enter, "0".
a. As a result of the distribution, what is Vogel's recognized capital gain? How much is reported as a distribution to shareholders?
Vogel recognizes a capital gain ✔ of $
a proportionate share of it passes through to the shareholders
land.
b. What is the net effect of the distribution on Vogel's AAA?
There is a net decrease
✔ of $
Vogel recognizes a loss $
would take a $
107,700 ✓ which is reported on Schedule K, and
✔. Jamari would take a $
Feedback
71,800✔ on Vogel's AAA.
c. Assume instead that the land had been purchased for $179,500 and was currently worth $71,800. How much would Vogel recognize as
a loss? What would be the net effect on Vogel's AAA? What would be Jamari's basis in the land?
o✓ and the net effect on Vogel's AAA is a decrease
71,800 ✓basis in the land.
179,500 ✓basis in the
✓of $
71,800 X . Jamari
✓ Check My Work
When an S corporation distributes property (instead of cash) to a shareholder, the effect on AAA and shareholder's basis must be determined.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education