Tiger Corp is a calendar year taxpayer that elected S status in its first year of operations.
Question:
Tiger Corp is a calendar year taxpayer that elected S status in its first year of operations. Tiger is owned by Herbert (600 shares with beginning AB = $12,000) and Leath (400 shares with beginning AB = $8000). The income statement for Tiger Corp is presented below.
The corporation’s beginning AAA balance was -$30,000, OAA was $1,000, and Accumulated E&P from prior years as a C corp was $1,000.
Sales Revenue | $105,000 | |
Municipal bond income | $5,000 | |
Cost of goods sold | ($45,000) | |
Salary expense to owners | ($20,000) | |
Employee wages | ($5,000) | |
Net STCG stock sale | $2,000 | |
Depreciation expense | ($10,000) | |
Charitable contributions | ($1,000) | |
Fines and Penalties | ($2,000) | |
Net Income | $29,000 | |
Tax depreciation is $15,000 of which $5,000 is Sec. 179 depreciation.
Tiger Corp also made a $10,000 distribution.
A. Provide a book-tax reconciliation above and distinguish between ordinary business income (loss) and separately stated items (taxable and nontaxable).
B. Determine the ending balances in all entity level accounts after the distribution.
C. Determine Harbert’s ending adjusted basis.
D. What is the tax treatment of the distribution to Harbert?
Expert Answer:
A The booktax reconciliation for Tiger Corp is as follows Sales Revenue 105000 Municipal bond ... View the full answer
