Question

Valence Corporation's Form 1120S shows ordinary income of $88,000 for the year. Daniel owns 40% of the Valence stock throughout the year. The following information is obtained from the corporate records.
Salary paid to Daniel ................ ($40,000)
Tax-exempt interest income ............ 5,000
Charitable contributions ............... (6,000)
Dividends received from a non-U.S. corporation .... 5,000
Long-term capital loss ............... (6,000)
Depreciation recapture income ........... 11,000
Refund of prior-year state income taxes ........ 5,000
Cost of goods sold.................($ 80,000)
Short-term capital loss ............... (7,000)
Administrative expenses .............. (18,000)
Short-term capital gain ............. .... 14,000
Selling expenses ................. (11,000)
Daniel’s beginning stock basis ........... 32,000
Daniel’s additional stock purchases ......... 9,000
Beginning AAA .................. 45,000
Daniel’s loan to corporation ............ 20,000
a. Compute Valence’s book income or loss.
b. Compute Daniel’s ending stock basis.
c. Calculate ending corporate AAA.


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  • CreatedMay 25, 2015
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