Mario and Alexa each own 50% of Kinetic Corporation, an S corporation. Both individuals actively participate in
Question:
Mario and Alexa each own 50% of Kinetic Corporation, an S corporation. Both individuals actively participate in Kinetic's business. On January 1, Mario and Alexa have adjusted bases for their Kinetic stock of $81,000 and $87,000, respectively. During the current year, Kinetic reports the following results:
Ordinary Loss: $170,000
Tax-Exempt Internet Income: $21,000
Long-Term Capital Loss: $30,000
Kinetic's balance sheet at year-end shows the following liabilities: accounts payable, $99,000; mortgage payable, $26,000; and note payable to Alexa, $7,000.
- What income and deductions will Mario and Alexa report from Kinetic's current year activities?
Begin by calculating the loss limitation for Mario and Alexa. ( Complete all answer boxes. Enter a “0” for any zero amounts.)
Mario Alexa |
Beginning stock basis $ $ |
? (use list to left) $ $ |
Stocks basis before losses $ $ |
? (use list to left) $ $ |
Loss limitation $ $ |
- What is Mario's stock basis on December 31?
- What are Alexa's stock basis and debt basis on December 31?
- What loss carryovers are available for Mario and Alexa?
- Explain how the use of the losses in Part a would change if instead Kinetic were a partnership and Mario and Alexa were partners who shared profits, losses, and liabilities equally.
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso