Question

Cougar, Inc., is a calendar year S corporation. Cougar’s Form 1120S shows nonseparately stated ordinary income of $80,000 for the year. Johnny owns 40% of the Cougar stock throughout the year. The following information is obtained from Cougar’s corporate records.
Tax-exempt interest income ............. $ 3,000
Salary paid to Johnny ................ (52,000)
Charitable contributions ............... (6,000)
Dividends received from a non-U.S. corporation .... 5,000
Short-term capital loss ............... (6,000)
Depreciation recapture income ........... 11,000
Refund of prior state income taxes ......... 5,000
Cost of goods sold ................ (72,000)
Long-term capital loss .............. (7,000)
Administrative expenses ............. (18,000)
Long-term capital gain ............... 14,000
Selling expenses ................. (11,000)
Johnny’s beginning stock basis ........... 32,000
Johnny’s additional stock purchases ......... 9,000
Beginning AAA ................ 31,000
Johnny’s loan to corporation ........... 20,000
a. Compute Cougar’s book income or loss.
b. Compute Johnny’s ending stock basis.
c. Calculate Cougar’s ending AAA balance.


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  • CreatedMay 25, 2015
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