WRT, a calendar year S corporation, has 100 shares of outstanding stock. At the beginning of...

WRT, a calendar year S corporation, has 100 shares of outstanding stock. At the beginning of the year, Mr. Wallace owned all 100 shares. On September 30, he gave 25 shares to his brother and 40 shares to his daughter. WRT’s ordinary income for the year was $216,000. What portion of this income must each shareholder include in income? Assume 365 days in a year. (Round income per day of ownership to 4 decimal places. Round your final answers to the nearest whole dollar amount.)

Brother $____

Daughter $______

Mr. Wallace $____

Expert Solution

Solution:

Calculation of Income per share = $216,000/100 = $2,160 per share

Income per Share per day = $2,160 / 365 = $5.9178 per share per day

Calculation of days of holding

Mr. Wallace has 100 shares from from 1 January to 30^th September = 273 Days

Mr. Wallace has 35 shares from from 1 October to 31^st December = 92 Days

Brother has 25 shares from from 1 October to 31^st December = 92 Days

Daughter has 40 shares from from 1 October to 31^st December = 92 Days

Calculation of income to be included in each Shareholder’s Income

	$
Calculation of Income of Mr. Wallace
100 Shares x $5.9178 x 273 days	1,61,556.16
35 Shares x $5.9178 x 92 days	19,055.34
	1,80,611.51
Calculation of Income of Brother
25 Shares x $5.9178 x 92 days	13,610.96

Calculation of Income of Daughter
40 Shares x $5.9178 x 92 days	21,777.53
Total Income	2,16,000.00

ekkarill92 answered 1 month ago

Austin owns 100% of the stock of MoJo Corp., which is a calendar year S corporation....

Austin owns 100% of the stock of MoJo Corp., which is a calendar year S corporation. MoJo has been an S corp for 12 years, but was a C corp prior to that. At the beginning of 20x1, MoJo has an Accumulated Adjustments Account of $200,000 and Accumulated Earnings and Profits from C-Corp years of $500,000. Austin has a stock basis of $300,000 on January 1, 20x1. MoJo has income of $0 in 20x1 ignoring any effect of distributions. MoJo...

Ignatius Corporation had 14 million shares of common stock outstanding during the current calendar year. It...

Ignatius Corporation had 14 million shares of common stock outstanding during the current calendar year. It issued 23,000, $1,000, convertible bonds on January 1. Each bond is convertible into 50 shares of common stock. The bonds were issued at face amount and pay interest semiannually at an annual rate of 11%. On June 30, Ignatius issued 230,000 shares of $100 par 6% cumulative preferred stock. Dividends are declared and paid quarterly. Ignatius has an effective tax rate of 40%. Ignatius...

Court Casuals has 300,000 shares of common stock outstanding as of the beginning of the year...

Court Casuals has 300,000 shares of common stock outstanding as of the beginning of the year and has the following transactions affecting stockholders' equity during the year. May 18 Issues 22,000 additional shares of $1 par value common stock for $43 per share. May 31 Purchases 5,000 shares of treasury stock for $44 per share. July 1 Declares a cash dividend of $2 per share to all stockholders of record on July 15. Hint: Dividends are not paid on treasury...

Court Casuals has 100,000 shares of common stock outstanding as of the beginning of the year...

Court Casuals has 100,000 shares of common stock outstanding as of the beginning of the year and has the following transactions affecting stockholders' equity during the year. May 18 Issues 25,000 additional shares of $1 par value common stock for $35 per share. May 31 Repurchases 6,000 shares of treasury stock for $44 per share. July 1 Declares a cash dividend of $1 per share to all stockholders of record on July 15. Hint: Dividends are not paid on treasury...

Tabb Corp has 9,293 shares of common stock outstanding at the beginning of the year. Net...

Tabb Corp has 9,293 shares of common stock outstanding at the beginning of the year. Net income was $359,293. No dividends were paid this year nor last year. On March 1st, the company purchased 2,000 shares of its common stock and held it in treasury. There was a 2 for 1 stock split that occurred on common stock on Dec. 1. The tax rate is 30%. A $1,500,000, 5% nonconvertible bond was issued June 30 of the current year at...

Pink Corporation is a calendar year taxpayer. Pete owns one-third (100 shares) of Pink stock. His...

Pink Corporation is a calendar year taxpayer. Pete owns one-third (100 shares) of Pink stock. His basis in the stock is $ 25000. Cheryl owns two-thirds (200 shares) of Pink stock. Her basis in the stock is $ 40000. On June 10 of the current year, Pink distributes $ 40000 to Pete and $ 80000 to Cheryl. Determine the tax consequences of the cash distributions to Pete and Cheryl in each of the following independent situations: a. Current E&P of...

Nottebart Corporation has outstanding 10,000 shares of $100 par value, 6% preferred stock and 60,000 shares...

Nottebart Corporation has outstanding 10,000 shares of $100 par value, 6% preferred stock and 60,000 shares of $10 par value common stock. The preferred stock was issued in January 2017, and no dividends were declared in 2017 or 2018. In 2019, Nottebart declares a cash dividend of $300,000. How will the dividend be shared by common and preferred stockholders if the preferred is (a) noncumulative and (b) cumulative?

1) XYZ Corporation has outstanding 1,000 shares of $100 par, 10% preferred stock, and 6,000 shares...

1) XYZ Corporation has outstanding 1,000 shares of $100 par, 10% preferred stock, and 6,000 shares of no-par common stock. Stangeland Corp.'s balance sheets show these issues as follows: pfd: $100K common: $120K Stangeland Corporation paid out dividends for the last four years as follows: year A, $9,000 b 10,000 C 17,000 D 33000. if the preferred stock is cumulative and fully participating, the allocation of the year D dividends between preferred and common stock was select one A) $...

Raymond Mining Corporation has 8.9 million shares of common stock outstanding, 330,000 shares of 5% $100...

Raymond Mining Corporation has 8.9 million shares of common stock outstanding, 330,000 shares of 5% $100 par value preferred stock outstanding, and 151,000 7.50% semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $37 per share and has a beta of 1.45, the preferred stock currently sells for $93 per share, and the bonds have 15 years to maturity and sell for 118% of par. The market risk premium is 7.7%, T-bills are yielding 4%, and...

Raymond Mining Corporation has 8.5 million shares of common stock outstanding, 290,000 shares of 4% $100...

Raymond Mining Corporation has 8.5 million shares of common stock outstanding, 290,000 shares of 4% $100 par value preferred stock outstanding, and 143,000 7.50% semiannual bonds outstanding, par value $1,000 each. The common stock currently sells for $33 per share and has a beta of 1.25, the preferred stock currently sells for $95 per share, and the bonds have 10 years to maturity and sell for 114% of par. The market risk premium is 7.3%, T-bills are yielding 6%, and...

Question