John owns all the stock of Lucas Corporation, an S corporation. John's basis for the 1,000 shares is $130,000. On June 11 of the current year (assume a non-leap year), John gifts 100 shares of stock to his younger brother Michael, who has been working in the business for one year. Lucas Corporation reports $125,000 of ordinary income for the current year. Requirement What amount of income is allocated to John? To Michael? (Use a 365-day year for computations. Do not round intermediary calculations. Only round the amount you enter in the input field to the nearest dollar.) John Michael Ordinary income allocated

John owns all the stock of Lucas Corporation, an S corporation. John's basis for the 1,000 shares is $130,000. On June 11 of the current year (assume a non-leap year), John gifts 100 shares of stock to his younger brother Michael, who has been working in the business for one year. Lucas Corporation reports $125,000 of ordinary income for the current year. Requirement What amount of income is allocated to John? To Michael? (Use a 365-day year for computations. Do not round intermediary calculations. Only round the amount you enter in the input field to the nearest dollar.) John Michael Ordinary income allocated

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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Rahul
2.
WRT, a calendar year S corporation, has 100 shares of outstanding stock. At the beginning of the year, Mr. Wallace owned all 100 shares. On September 30, he gave 25 shares to his brother and 40 shares to his daughter. WRT's ordinary income for the year was $208,000. Required: What portion of this income must each shareholder include in income? Note: Assume 365 days in a year. Round income per day of ownership to 4 decimal places. Round other intermediate calculations and final answers to the nearest whole dollar amount. Brother's income Daughter's income Mr. Wallace's income Amount
Rahul
please provide explanation: Ron owns 1,000 shares of Juno Corporation common stock which he purchased in 20X6 for $12.000. On 5-30-20X9 he purchases an additional 300 shares for $2,000. On 6-20-20X9 he sells the original 1,000shares for $8,000. On 7-15-20X9 he purchases 450 shares of Juno stock for $5.000. What is Ron's recognized gain or loss as a result of the sale of the stock and what is the basis for the shares purchased on 7-15-20X9, respectively?a. $1,000 loss; $6,200 basisb. $3,000 loss; $6,800 basisc. $4,000 loss; $5,000 basisd. $1,000 loss; $6,800 basise. None of the answers provided is correct.
Sonny and Cher equally own Song Corporation, an 5 corporation. Each has a $50,000 stock basis at the beginning of the year. Song Corporation has a $100,000 mortgage on its balance sheet, as well as a note payable to Cher for $25,000. During the current year, Song Corporation reports an ordinary loss of $105,000. 1. What is Sonny's stock basis at the end of the year? 2. What is Sonny's debt basis at the end of the year? 3. What loss will Sonny report on his tax return for the year? 4. What is Cher's stock basis at the end of the year? 5. What is Cher's debt basis at the end of the year? 6. What loss will Cher report on her tax return for the year?
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! Required information [The following information applies to the questions displayed below.) Tiny and Tim each owns half of the 100 outstanding shares of Flower Corporation. This year, Flower reported taxable Income of $6,000. In addition, Flower received $20,000 of life insurance proceeds due to the death of an employee (Flower paid $500 in life insurance premiums this year). Flower had $5,000 of accumulated E&P at the beginning of the year. (Leave no answer blank. Enter zero if applicable.) c. What amount of capital gain (if any) would Tiny and Tim report on the distributions in part (b) if their stock bases are $2.000 and $10,000, respectively? (Do not round intermediate calculations.) Answer is complete but not entirely correct. S 4,000 5 23,000 Capital gain Tiny Capital gain-Tim
At the beginning of the current year, Tymoe, an S corporation, was owned by two individual shareholders, Tyler and Moe. Tyler owns 52% and Moe owns 48%. During the year, Tymoe had ordinary income of $480,000, a net long-term capital gain of $45,000, and charitable contributions of $12,000. What is the amount of ordinary income, capital gain, and charitable contribution from Tymoe's activities that Tyler and Moe must each report in the current year?
In the current year, Dan, Jay, and Erin form Zeus Corporation. Dan contributes land (a capital asset) having a $75,000 FMV (fair market value) in exchange for 85 shares of Zeus stock. He purchased the land three years ago for $100,000. Jay contributes machinery (Sec. 1231 property purchased four years ago) having a $115,000 adjusted basis and a $45,000 FMV in exchange for 75 shares of Zeus stock. Erin contributes services worth $30,000 in exchange for 10 shares of Zeus stock. A. What is the amount of Dan's recognized gain or loss? b.What is Dan's basis in his Zeus shares? When does his holding period begin? c.What is the amount of Jay's recognized gain or loss? d. What is Jay's basis in his Zeus shares? When does his holding period begin? e.How much income, if any, does Erin recognize? f.What is Erin's basis in her Zeus shares? When does her holding period begin? g. What is Zeus's basis in the land and the machinery? When does its holding period begin? How…
In the current year, Tom , Jay , and Dana form Ares Corporation. Tom contributes land (a capital asset) having a $62,500 FMV (fair market value) in exchange for 165 shares of stock. He purchased the land three years ago for $65,000. Jay contributes machinery (Sec. 1231 property purchased four years ago) having a $115,000 adjusted basis and a $37,500 FMV in exchange for 105 shares of Ares stock. Dana contributes services worth $25,000 in exchange for 60 shares of Ares stock.
On December 7 of the tax year, S (a single taxpayer) decided to sell all of the stock that she owns and reinvest the proceeds in state of Colorado bonds. Information about the stock is provided below: Corporation FMV Basis Holding Period ABC $180,000 $130,000 11 months LMN 200,000 255,000 5 years XYZ 382,000 300,000 2 years She is willing to sell some of the stock this year and the remaining stock next year if it is more advantageous to spread the sales over two years. Assume the fair market value of the stock will not change and her regular tax rate is 32% (and will be 32% next year). (Disregard present value calculations and the medicare tax on net investment income.) Determine the change in her income tax for the two years combined if she sells ABC and LMN this year and XYZ in March of next year.