McGraw-Hill's Taxation of Individuals and Business Entities 2020 Edition
11th Edition
ISBN: 9781260432466
Author: SPILKER, Brian
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 15, Problem 57P
Dave and his friend Stewart each own 50 percent of KBS. During the year, Dave receives $75,000 compensation for services he performs for KBS during the year. He performed a significant amount of work for the entity and he was heavily involved in management decisions for the entity (he was not a passive investor in KBS). After deducting Dave’s compensation, KBS reports taxable income of $30,000. How much FICA and/or self-employment tax is Dave required to pay on his compensation and his share of the KBS income if KBS is formed as a C corporation, an S corporation, or a limited liability company (ignore the .9 percent additional Medicare tax)?
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Joe and Ethan each own 50% of JH Corporation, a calendar year taxpayer. Distributions from JH are: $750,000 to Joe on April 1 and $250,000 to Ethan on May 1. JH’s current E & P is $300,000 and its accumulated E & P is $600,000. How much of the accumulated E & P is allocated to Ethan’s distribution? a. $0b. $75,000c. $150,000d. $300,000e. None of the above b or c?
Please provide the accurate answer to this general accounting problem using appropriate methods.
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McGraw-Hill's Taxation of Individuals and Business Entities 2020 Edition
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