I am trying to solve some questions, I answer two of them, but not sure if they are correct Chapter 10 23. George and Georgenne formed and equal shareholders in an S corporation. Each one contributed cash and property with a value of $100,000 for partnership operations. As a result of these contributions, George had a basis of $80,000 and Georgenne a basis of $60,000. At the end of their first year of operations, they had the following results: Gross Sales $150,000 Cost of Good Sold 95,000 Rent expense 15,000 Salaries to employees 15,000 Utilities 4,000 Charitable contributions 1,000 Section 1231 gain 2,000 a. What is the net income, excluding separately stated items that each shareholder is required to report at the end of the year? b. How is each of the separately stated items treated on the shareholders? tax returns? Section 1231 gain will be included with any other Section 1231 gains and losses in the netting process for each partner. Related to charitable contribution will be included with George and Georgenne other charitable contributions and reported as an itemized deduction. c. What is each shareholder?s basis at year-end 36. During the current year, Biggie, Inc., a delivery company operating as an S Corporation, reported the following results from operations: Revenue $280,000 Salaries 130,000 Truck expenses 30,000 Taxes 18,000 Section 1231 loss 8,000 Traffic fines 1,200 Interest expense on truck loans 2,000 Interest income (bonds) 500 What are the corporation?s net income and its separately reported items? Separately Reported Items: Truck expenses 30,000 I will consider this as Sec 179 Section 1231 loss 8,000 Interest expense on truck loans 2,000 Interest income (bonds) 500 Total Separately Reported Items 40,500 Revenue $280,000 Salaries 130,000 Truck expenses 30,000 EBITDA 120,000 Taxes 18,000 Net Income 102,000 37. Crow Corporation, as S corporation from the date of its incorporation, is in the process of liquidating. During the current year, it reports gross receipts of only $40,000; it has passive investment income of $25,000 from assets. It has expenses related to this income of $1,000. Is the corporation liable for the passive investment income tax? 38. The Jane Corporation, an S corporation, makes several property distributions to its two equal shareholders, A and B, during the year. The distributions are as follow: A B Cash $5,000 $5,000 Land (Basis=$5,000) $10,000 (FMV) Equipment (Basis=$15,000) $10,000(FMV) At the beginning of the year, the corporation?s accumulated adjustments account is $35,000; A?s basis in his shares is $24,000; and B?s basis is $32,000. The corporation reports net income of $6,000 for the year, excluding any effect of the distributions. Determine the basis in A and B?s shares and the balance in the corporation?s AAA at the end of the year.

Raul Quiroz Assignment Week 6 1 Chapter 10 23. George and Georgenne formed and equal shareholders in an S corporation. Each one contributed cash and property with a value of $100,000 for partnership operations. As a result of these contributions, George had a basis of $80,000 and Georgenne a basis of $60,000. At the end of their first year of operations, they had the following results: Gross Sales Cost of Good Sold Rent expense Salaries to employees Utilities Charitable contributions Section 1231 gain $150,000 95,000 15,000 15,000 4,000 1,000 2,000 a. What is the net income, excluding separately stated items that each shareholder is required to report at the end of the year? b. How is each of the separately stated items treated on the shareholders' tax returns? Section 1231 gain will be included with any other Section 1231 gains and losses in the netting process for each partner. Related to charitable contribution will be included with George and Georgenne other charitable contributions and reported as an itemized deduction. c. What is each shareholder's basis at year-end Raul Quiroz Assignment Week 6 2 36. During the current year, Biggie, Inc., a delivery company operating as an S Corporation, reported the following results from operations: Revenue Salaries Truck expenses Taxes Section 1231 loss Traffic fines Interest expense on truck loans Interest income (bonds) $280,000 130,000 30,000 18,000 8,000 1,200 2,000 500 What are the corporation's net income and its separately reported items? Separately Reported Items: Truck expenses Section 1231 loss Interest expense on truck loans Interest income (bonds) 30,000 8,000 2,000 500 Total Separately Reported Items 40,500 Revenue Salaries Truck expenses EBITDA Taxes Net Income I will consider this as Sec 179 $280,000 130,000 30,000 120,000 18,000 102,000 37. Crow Corporation, as S corporation from the date of its incorporation, is in the process of liquidating. During the current year, it reports gross receipts of only $40,000; it has passive investment income of $25,000 from assets. It has expenses related to this income of $1,000. Is the corporation liable for the passive investment income tax? 38. The Jane Corporation, an S corporation, makes several property distributions to its two equal shareholders, A and B, during the year. The distributions are as follow: Cash Land (Basis=$5,000) A $5,000 $10,000 (FMV) B $5,000 Raul Quiroz Equipment (Basis=$15,000) Assignment Week 6 3 $10,000(FMV) At the beginning of the year, the corporation's accumulated adjustments account is $35,000; A's basis in his shares is $24,000; and B's basis is $32,000. The corporation reports net income of $6,000 for the year, excluding any effect of the distributions. Determine the basis in A and B's shares and the balance in the corporation's AAA at the end of the year