1.  S corporation GVL Inc. had an ordinary business loss last tax year. At the beginning of the current tax year, Ben, a 50% shareholder, had zero basis and an unused loss carryover of $3,000. GVL recovered during the current tax year and reported on Schedule K (Form 1120- S) $10,000 net business income as well as a $1,000 Section 179 deduction on new equipment. Ben has $35,000 net income from other businesses during the current tax year. This is a three- part question.

Question 1: What amount of ordinary loss from GVL Inc. can Ben deduct on his personal tax return?

Question 2: How much of the GVL loss must Ben carry over until his basis is reestablished? 

Question 3: What is Ben's adjusted basis in GVL Inc. at the end of the current tax year

2. CPC Inc., a C corporation with accumulated earnings and profits, elected to be an S corporation four years ago. In the current tax year, gross receipts total $200,000 which included $80,000 of passive investment income ($30,000 dividends and $50,000 from rents). Since CPC is in the electronics business, all rental income is passive. Expenditures directly connected with production of the passive investment income total $39,000, consisting of $4,000 in broker fees and $35,000 in rental expenses. CPC also has $90,000 in non-separately stated business deductions and $5,000 in charitable contributions. This is a four-part question. (Round to the nearest dollar.)

Question 1: What amount of excess net passive income does CPC have in the current tax year? 

Question 2: What amount of excess net passive income (ENPI) tax does CPC owe?

Question 3: What amount of dividends is reported on Schedule K (Form 1120-S) as passed through to the shareholders?

Question 4: What amount of net rental real estate income is reported on Schedule K (Form 1120-S) as passed through to the shareholders?

Answer rating: 100% (QA)

Question 1 To determine the amount of ordinary loss from GVL Inc that Ben can deduct on his personal tax return we need to consider the following Bens ... View the full answer