Law question data bank Law question data bank Question 1377. CHAPTER 12—S CORPORATIONS Question PR #1 Janet Wang is a 50% owner of a calendar year S corporation. During 2011, the S corporation has ordinary income of $175,000, short-term capital gain of $94,000, tax-exempt income of $22,000, and a charitable contribution of $18,000. What S corporation items must Janet report in 2011? Save your time! Proper editing and formatting Free revision, title page, and bibliography Flexible prices and money-back guarantee ORDER NOW 1378. CHAPTER 12—S CORPORATIONS Question PR #2 Simmen, Inc., a calendar year S corporation, incurred the following items in 2011. Municipal bond interest $ 6,200 Make sure you submit a unique essay Our writers will provide you with an essay sample written from scratch: any topic, any deadline, any instructions. 100% ORIGINAL ORDER NOW Sales 122,000 § 1245 gain 11,000 Long-term capital gain 16,000 Cost of goods sold 39,000 Administrative expenses 15,000 Depreciation expenses 18,000 Charitable contribution 12,000 Calculate Simmen’s nonseparately computed income. 1379. CHAPTER 12—S CORPORATIONS Question PR #3 Bidden, Inc., a calendar year S corporation, incurred the following items. Sales $130,000 Depreciation recapture income 12,000 Short-term capital gain 30,000 Cost of goods sold (42,000) Municipal bond interest income 7,000 Administrative expenses (15,000) Depreciation expense (17,000) Charitable contributions (14,000) Calculate Bidden’s nonseparately computed income. 1380. CHAPTER 12—S CORPORATIONS Question PR #4 Gene Grams is a 45% owner of a calendar year S corporation during 2011. His beginning stock basis is $230,000, and the S corporation reports the following items. Ordinary income $64,000 Short-term capital gain 16,000 § 1231 loss 6,000 Tax-exempt interest income 5,000 Calculate Grams’ stock basis at year-end. 1381. CHAPTER 12—S CORPORATIONS Question PR #5 During 2011, Ms. Rasic, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. On December 31, 2010, Ms. Rasic’s stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. Calculate the amount and type of income Ms. Rasic recognizes in 2011, assuming there is no C corporation AEP. 1382. CHAPTER 12—S CORPORATIONS Question PR #6 Individuals Adam and Bonnie form an S corporation, with Adam contributing cash of $100,000 for a 50% interest and Bonnie contributing appreciated ordinary income property with an adjusted basis of $20,000 and a fair market value of $100,000. a. Determine Bonnie’s initial basis in her stock, assuming that she receives a 50% interest. b. The S corporation sells the property for $120,000. Determine Adam’s and Bonnie’s stock basis after the sale. c. Determine Adam’s and Bonnie’s gain or loss if the company is liquidated. 1383. CHAPTER 12—S CORPORATIONS Question PR #7 You are a 60% owner of an S corporation. Calculate your ending stock basis, based upon these facts. Beginning stock basis $42,570 Stock purchases 15,000 Insurance premiums paid (nondeductible) 3,600 Tax-exempt interest income 5,230 Payroll tax penalty 3,770 Increase in AAA 22,400 Increase in OAA 5,800 1384. CHAPTER 12—S CORPORATIONS Question PR #8 On December 31, 2010, Erica Sumners owns one share of an S corporation’s 10 outstanding shares of stock. The basis of Erica’s share is $300. During 2011, the S corporation has no income or deductions, but incurs a loss of $3,650. Determine the amount of the loss allocated to Erica, and calculate her stock basis at the end of 2011. 1385. CHAPTER 12—S CORPORATIONS Question PR #9 Blue Corporation elects S status effective for tax year 2011. As of January 1, 2011, Blue’s assets were appraised as follows. Adjusted Basis Fair Market Value Cash Accounts receivable Inventory (FIFO) Investment in land Building Goodwill $ 16,010 –0– 70,000 110,000 220,000 –0– $ 16,010 55,400 90,000 195,000 275,000 93,000 In each of the following situations, calculate any built-in gains tax, assuming that the highest corporate tax rate is 35%. C corporation taxable income would have been $100,000. a. During 2011, Blue collects $48,000 of the accounts receivable and sells 80% of the inventory for $99,000. b. In 2012, Blue sells the land held for investment for $203,000. c. In 2013, the building is sold for $270,000. 1386. CHAPTER 12—S CORPORATIONS Question PR #10 Pepper, Inc., an S corporation in Norfolk, VA, generates revenues of $400,000, taxable interest of $380,000, operating expenses of $250,000, and deductions attributable to the interest income of $140,000. Calculate any passive investment income penalty tax payable by Pepper. 1387. CHAPTER 12—S CORPORATIONS Question ES #1 What are the characteristics of an S corporation’s straight debt? 1388. CHAPTER 12—S CORPORATIONS Question ES #2 Explain how family members are treated for purposes of the number of shareholders requirement concerning S corporation status. 1389. CHAPTER 12—S CORPORATIONS Question ES #3 List some of the separately stated items listed on Schedule K of the Form 1120S. 1390. CHAPTER 12—S CORPORATIONS Question ES #4 Discuss the two methods of allocating S items to shareholders. . 1391. CHAPTER 12—S CORPORATIONS Question ES #5 Compare the distribution of property rules for an S corporation with the corresponding partnership rules. 1392. CHAPTER 12—S CORPORATIONS Question ES #6 How may an S corporation manage its liability for the built-in gains tax? . 1393. CHAPTER 12—S CORPORATIONS Question ES #7 Explain how the domestic production activities deduction is used for an S corporation.