1377. CHAPTER 12—S CORPORATIONS Question PR #1
Janet Wang is a 50% owner of a calendar year S corporation. During 2011, the S corporation has ordinary income of $175,000, short-term capital gain of $94,000, tax-exempt income of $22,000, and a charitable contribution of $18,000. What S corporation items must Janet report in 2011?
1378. CHAPTER 12—S CORPORATIONS Question PR #2
Simmen, Inc., a calendar year S corporation, incurred the following items in 2011.
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| Municipal bond interest | $ 6,200 |
| Sales | 122,000 |
| § 1245 gain | 11,000 |
| Long-term capital gain | 16,000 |
| Cost of goods sold | 39,000 |
| Administrative expenses | 15,000 |
| Depreciation expenses | 18,000 |
| Charitable contribution | 12,000 |
Calculate Simmen’s nonseparately computed income.
1379. CHAPTER 12—S CORPORATIONS Question PR #3
Bidden, Inc., a calendar year S corporation, incurred the following items.
| Sales | $130,000 |
| Depreciation recapture income | 12,000 |
| Short-term capital gain | 30,000 |
| Cost of goods sold | (42,000) |
| Municipal bond interest income | 7,000 |
| Administrative expenses | (15,000) |
| Depreciation expense | (17,000) |
| Charitable contributions | (14,000) |
Calculate Bidden’s nonseparately computed income.
1380. CHAPTER 12—S CORPORATIONS Question PR #4
Gene Grams is a 45% owner of a calendar year S corporation during 2011. His beginning stock basis is $230,000, and the S corporation reports the following items.
| Ordinary income | $64,000 |
| Short-term capital gain | 16,000 |
| § 1231 loss | 6,000 |
| Tax-exempt interest income | 5,000 |
Calculate Grams’ stock basis at year-end.
1381. CHAPTER 12—S CORPORATIONS Question PR #5
During 2011, Ms. Rasic, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. On December 31, 2010, Ms. Rasic’s stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. Calculate the amount and type of income Ms. Rasic recognizes in 2011, assuming there is no C corporation AEP.
1382. CHAPTER 12—S CORPORATIONS Question PR #6
Individuals Adam and Bonnie form an S corporation, with Adam contributing cash of $100,000 for a 50% interest and Bonnie contributing appreciated ordinary income property with an adjusted basis of $20,000 and a fair market value of $100,000.
| a. | Determine Bonnie’s initial basis in her stock, assuming that she receives a 50% interest. |
| b. | The S corporation sells the property for $120,000. Determine Adam’s and Bonnie’s stock basis after the sale. |
| c. | Determine Adam’s and Bonnie’s gain or loss if the company is liquidated. |
1383. CHAPTER 12—S CORPORATIONS Question PR #7
You are a 60% owner of an S corporation. Calculate your ending stock basis, based upon these facts.
| Beginning stock basis | $42,570 | |
| Stock purchases | 15,000 | |
| Insurance premiums paid (nondeductible) | 3,600 | |
| Tax-exempt interest income | 5,230 | |
| Payroll tax penalty | 3,770 | |
| Increase in AAA | 22,400 | |
| Increase in OAA | 5,800 | |
1384. CHAPTER 12—S CORPORATIONS Question PR #8
On December 31, 2010, Erica Sumners owns one share of an S corporation’s 10 outstanding shares of stock. The basis of Erica’s share is $300. During 2011, the S corporation has no income or deductions, but incurs a loss of $3,650. Determine the amount of the loss allocated to Erica, and calculate her stock basis at the end of 2011.
1385. CHAPTER 12—S CORPORATIONS Question PR #9
Blue Corporation elects S status effective for tax year 2011. As of January 1, 2011, Blue’s assets were appraised as follows.
| Adjusted Basis | Fair Market Value | |
| Cash Accounts receivable Inventory (FIFO) Investment in land Building Goodwill | $ 16,010 –0– 70,000 110,000 220,000 –0– | $ 16,010 55,400 90,000 195,000 275,000 93,000 |
In each of the following situations, calculate any built-in gains tax, assuming that the highest corporate tax rate is 35%. C corporation taxable income would have been $100,000.
| a. | During 2011, Blue collects $48,000 of the accounts receivable and sells 80% of the inventory for $99,000. |
| b. | In 2012, Blue sells the land held for investment for $203,000. |
| c. | In 2013, the building is sold for $270,000. |
1386. CHAPTER 12—S CORPORATIONS Question PR #10
Pepper, Inc., an S corporation in Norfolk, VA, generates revenues of $400,000, taxable interest of $380,000, operating expenses of $250,000, and deductions attributable to the interest income of $140,000. Calculate any passive investment income penalty tax payable by Pepper.
1387. CHAPTER 12—S CORPORATIONS Question ES #1
What are the characteristics of an S corporation’s straight debt?
1388. CHAPTER 12—S CORPORATIONS Question ES #2
Explain how family members are treated for purposes of the number of shareholders requirement concerning S corporation status.
1389. CHAPTER 12—S CORPORATIONS Question ES #3
List some of the separately stated items listed on Schedule K of the Form 1120S.
1390. CHAPTER 12—S CORPORATIONS Question ES #4
Discuss the two methods of allocating S items to shareholders.
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1391. CHAPTER 12—S CORPORATIONS Question ES #5
Compare the distribution of property rules for an S corporation with the corresponding partnership rules.
1392. CHAPTER 12—S CORPORATIONS Question ES #6
How may an S corporation manage its liability for the built-in gains tax?
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1393. CHAPTER 12—S CORPORATIONS Question ES #7
Explain how the domestic production activities deduction is used for an S corporation
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