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 $226,000. 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. Answer is complete but not entirely correct. Amount Brother's income $ 14,237 Daughter's income $ 22,779 Mr. Wallace's income $ 188,919

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 $226,000. 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. Answer is complete but not entirely correct. Amount Brother's income $ 14,237 Daughter's income $ 22,779 Mr. Wallace's income $ 188,919

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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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 $232,000. Required:What portion of this income must each shareholder include in income? (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.)
Gopher Corporation began the year with a large amount of accumulated earnings and profits and ended the year reporting taxable income of $100,000. Gopher wants to distribute its after-tax earnings to its sole shareholder, Sven Anderson. The dividend would meet the requirements to be a qualified dividend, and Sven is subject to a tax rate of 15 percent on dividend income. What is the amount of the dividend distribution and how much income does Sven realize after taxes? Answer is not complete. Corporate income Corporate tax Dividend distribution to Seven Shareholder tax Total after tax income $100,000 $105,000 x $ 15,000
XYZ Corporation, a calendar year C Corporation, has $100,000 gross business receipts, $5,000 interest income from corporate bonds, $20,000 qualified dividend income from a 5% owned C Corporation, $110,000 business expenses, and $2,000 charitable contribution. How much is XYZ's taxable income (or net operating loss) for the current year?\\n\\nGroup of answer choices\\n\\n$0 Taxable income.\\n\\n$3,000 Taxable income.\\n\\n$6,500 Taxable income.\\n\\n$6,750 Taxable income.
Tiger Corp is a calendar year taxpayer that elected S status in its first year of operations. Tiger is owned by Harbert (600 shares with beginning AB = $12,000) and Leath (400 shares with beginning AB = $8000). The income statement for Tiger Corp is presented below. The corporation’s beginning AAA balance was -$30,000, OAA was $1,000, and Accumulated E&P from prior years as a C corp was $1,000. Sales Revenue $105,000 Municipal bond income $5,000 Cost of goods sold ($45,000) Salary expense to owners ($20,000) Employee wages ($5,000) Net STCG stock sale $2,000 Depreciation expense ($10,000) Charitable contributions ($1,000) Fines and Penalties ($2,000) Net Income $29,000 Tax depreciation is $15,000 of which $5,000 is Sec. 179 depreciation. Tiger Corp also made a $10,000 distribution. Provide a book-tax reconciliation above and distinguish between ordinary business income (loss) and separately stated items…
On January 1 of the current year, Rhondell Corporation has accumulated E & P of $132,000. Current E & P for the year is $396,000, earned evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of Rhondell from January 1 to April 30. On May 1, Elizabeth sells all of her stock to Marshall. Rhondell makes two distributions to shareholders during the year: a total of $211,200 ($105,600 to Elizabeth and $105,600 to Jonathan) on April 30 and a total of $369,600 ($184,800 to Jonathan and $184,800 Marshall) on December 31. Determine the allocation of the distributions by completing the table below. Assume that the shareholders have sufficient basis in their stock for any amount that is treated as return of capital. If an amount is zero, enter "0". If required, round any division to two decimal places and use in subsequent computations. Round final answers to the nearest dollar. From Current E & P From Accumulated E & P Treated as Return of Capital April 30 distribution…
Show your work Cerulean Corporation has two equal shareholders, Marco and Avery. Marco acquired his Cerulean stock three years ago by transferring property worth $700,000, basis of $300,000, for 70 shares of the stock. Avery acquired 70 shares in Cerulean Corporation two years ago by transferring property worth $660,000, basis of $110,000. Cerulean Corporation’s accumulated E & P as of January 1 of the current year is $350,000. On March 1 of the current year, the corporation distributed to Marco property worth $120,000, basis to Cerulean of $50,000. It distributed cash of $220,000 to Avery. On July 1 of the current year, Avery sold her stock to Harpreet for $820,000. On December 1 of the current year, Cerulean distributed cash of $90,000 each to Harpreet and Marco. What are the tax issues?
Brent, Matt, Chris, Brad, and Anwer are five unrelated shareholders, and they each owns 20 of the 100 outstanding shares of Aggie Corporation. On June 30 of this year, Aggie distributed $100,000 in cash to the shareholders. On September 30 of this year, Aggie redeemed all Anwer's shares for $80,000. Aggie had $45,000 of accumulated E&P at the beginning of the year and reported $120,000 of current E&P at year-end. What is Aggie's accumulated E&P at the beginning of next year? Consult Revenue Rule 74-338. (Hint: determine the tax status of the redemption and then calculate the effect of the June distribution on current E&P.) Note: Negative amount should be indicated with a minus sign. > Answer is not complete. Current E&P $ 120,000 Less dividends paid (100,000) Undistributed Current E&P $ 20,000 Prorated Undistributed Current E&P at 9/30 S 15,000 Add Accumulated E&P at the beginning of year 45,000 Total Accumulated E&P at 9/30 $ 60,000 Reduce Accumulated E&P by Add current E&P in 4th…
On January 2, Chaz transfers cash of $165,800 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $41,450. The income is credited to the earnings and profits account of the corporation. The corporation distributes $12,435 to Chaz. If an amount is zero, enter "0". a. How do Chaz and the corporation treat the $12,435 distribution? Chaz has a of $ and the corporation has a deduction of $ b. Assume, instead, that Chaz transfers to the corporation cash of $82,900 for stock and cash of $82,900 for a note of the same amount. The note is payable in equal annual installments of $8,290 and bears interest at the rate of 6%. No distributions are made during the year to Chaz. However, at the end of the year, the corporation pays an amount to meet the loan obligation (i.e., the annual $8,290 principal payment plus the interest due). Determine the total amount of the payment and its tax treatment to Chaz and the corporation. The corporate…
Twinning, a calendar year S corporation, distributes $62,200 cash to its only shareholder, Carl, on December 31. Before the distribution, Carl's basis in his stock is $74,640, Twinning 's AAA balance is $27,990, and Twinning has $9,330 of AEP. What is Carl’s stock basis after the distribution? Answer_______
At her death, Chow owned 55% of the stock in Finch Corporation, with the balance held by family members. In the past five years, Finch has earned average net profits of $1,830,000, and on the date of Chow's death, the book value of its stock is $4,575,000. An appropriate rate of return for the type of business Finch is in is 5.05%. If required, round your intermediate computations to the nearest dollar. a. If goodwill exists, the total value of Finch stock is $ What value would the IRS argue that the stock Chow owned should be included in her estate? b. Considering the facts given, identify some factors that could be present to reduce the value of such goodwill by selecting "Yes" for ones that can impact a goodwill valuation and "No" for ones that won't. 1. 2. 3. 4. Extraordinary gains. Lower than industry average salaries. Chow was the key person in the success of the business. The appropriate rate of return for this type of business is low. Yes Yes Yes Yes
Four unrelated shareholders own Benton Corporation's 400 shares of outstanding stock. As indicated below, Benton redeems a total of 100 shares for $500 per share from three of its shareholders. Each shareholder has a $230 per share basis in his or her stock. Benton's current and accumulated earnings and profits (E&P) at the end of the tax year is $150,000. View the shareholder data. Read the requirements. to Ethel, Fran, and Georgia? Ethel Fran Georgia Amount of income, gain, or loss Ethel Fran Georgia Character of income, gain, or loss Amount of income, gain, or loss 50,000 0 50,000 capital gain capital gain capital gain Requirement b. How would your answer to Part a change if Ethel were Georgia's mother? Character of income, gain, or loss dividend income return of capital Basis of remaining shares dividend income Basis of remaining shares Shareholder Data Shareholder Ethel Fran Georgia Henry Total Shares Held Before the Redemption Print 200 100 50 50 400 Done Shares Redeemed 40 30 30…
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