Entity was formed during 2013. Chris acquired a 25% interest in the Entity on 1/1/17 by...
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Entity was formed during 2013. Chris acquired a 25% interest in the Entity on 1/1/17 by transferring property worth $65,000 in which she had basis of $50,000. At 1/1/17, the Entity had recourse debt of $200,000. During 2017, Chris loaned $20,000 to the Entity. 25 % of the entity items for the year are as follows: Loss from operations • LTCG longterm carital Municipal bond interest income ($130,000) 10,000 8,000 Charitable contributions 1,000 Interest expense related to muni bond 2,000 In addition, during the year, Chris received a distribution of $12,000. If the entity is a C corporation, the distribution is a dividend. At 12/31/17, the Entity's balance sheet shows recourse debt balance of $100,000. The Chris Loan balance remains unchanged. Required: a) Assume Entity is a General Partnership-Compute Chris's outside basis. b) Assume Entity is an S Corporation - Compute Chris's outside basis. c) Assume Entity is a C Corporation and the distributions represent dividends to the shareholders. Compute Chris's outside basis. SHOW YOUR WORK ON THE SPACES PROVIDED IN THE NEXT PAGES Entity was formed during 2013. Chris acquired a 25% interest in the Entity on 1/1/17 by transferring property worth $65,000 in which she had basis of $50,000. At 1/1/17, the Entity had recourse debt of $200,000. During 2017, Chris loaned $20,000 to the Entity. 25 % of the entity items for the year are as follows: Loss from operations • LTCG longterm carital Municipal bond interest income ($130,000) 10,000 8,000 Charitable contributions 1,000 Interest expense related to muni bond 2,000 In addition, during the year, Chris received a distribution of $12,000. If the entity is a C corporation, the distribution is a dividend. At 12/31/17, the Entity's balance sheet shows recourse debt balance of $100,000. The Chris Loan balance remains unchanged. Required: a) Assume Entity is a General Partnership-Compute Chris's outside basis. b) Assume Entity is an S Corporation - Compute Chris's outside basis. c) Assume Entity is a C Corporation and the distributions represent dividends to the shareholders. Compute Chris's outside basis. SHOW YOUR WORK ON THE SPACES PROVIDED IN THE NEXT PAGES
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Accounting Tools for Business Decision Making
ISBN: 978-1118128169
5th edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
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