Year 1 Jack Jill Year 2 Year 1 Year 2 Ordinary income Qualified business income Interest income $ 500 $ 625 $ 1,500 Dividend income $ 125 $ 250 $ 375 Allocated wages Unadjusted basis of qualified property $ 25,000 $ 25,000 $ 75,000 $ $ 6 6 1,875 750 69 $ 75,000
Year 1 Jack Jill Year 2 Year 1 Year 2 Ordinary income Qualified business income Interest income $ 500 $ 625 $ 1,500 Dividend income $ 125 $ 250 $ 375 Allocated wages Unadjusted basis of qualified property $ 25,000 $ 25,000 $ 75,000 $ $ 6 6 1,875 750 69 $ 75,000
Chapter13: Tax Credits And Payment Procedures
Section: Chapter Questions
Problem 25P: LO.2 Oak Corporation has the following general business credit carryovers. If the general business...
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Question
Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively.
| UpAHill Corporation (an S Corporation) | ||
| Income Statement | ||
| December 31, Year 1 and Year 2 | ||
| Year 1 | Year 2 | |
|---|---|---|
| Sales revenue | $ 175,000 | $ 310,000 |
| Cost of goods sold | (60,000) | (85,000) |
| Salary to owners Jack and Jill | (40,000) | (50,000) |
| Employee wages | (15,000) | (20,000) |
| (10,000) | (15,000) | |
| Miscellaneous expenses | (7,500) | (9,000) |
| Interest income (unrelated to business) | 2,000 | 2,500 |
| Qualified dividend income | 500 | 1,000 |
| Overall net income | $ 45,000 | $ 134,500 |
a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years.
Transcribed Image Text:Year 1
Jack
Jill
Year 2
Year 1
Year 2
Ordinary income
Qualified business income
Interest income
$
500 $
625
$
1,500
Dividend income
$
125 $
250 $
375
Allocated wages
Unadjusted basis of qualified property
$
25,000 $
25,000 $ 75,000
$
$
6 6
1,875
750
69
$
75,000
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