Luna owns 80% of Good stock (S-corporation) throughout the year. Luna’s beginning of the year stock...

Luna owns 80% of Good stock (S-corporation) throughout the year. Luna’s beginning of the year stock basis is $25,000. Luna has an additional stock purchase (investment) this year of $15,000. Luna loans the Corporation $150,000 this year. Good Corporation has beginning AAA of $163,000. Good Corporation’s Form 1120S shows the following information.

Sales 600,000

Long Term Capital Loss 6,000

Cost of Goods Sold 350,000

Tax Exempt Interest Income 5,000

Charitable contribution 60,000

Distribution to Luna 40,000

What is Luna’s end of the year stock basis?
What is Good Corporation’s end of the year AAA balance?

Expert Solution

Answer

a. Luna end of the year stock basis

Luna's beginning of the year stock basis	$ 25,000
Add: Additional stock purchase this year	$ 15,000
80% of ordinary income(600000-350000)*80% ( WN)	$ 2,00,000
Tax exempt interest income (80%)	$ 4,000
Less: Charitable contribution (80%)	$ -48,000
Long term capital loss (80%)	$ -4,800
Lisa's end of the year stock basis	$ 1,91,200

Luna's debt basis
Luna loan the corporation this year	$ 1,50,000

Working note:
Ordinary income
Sales	$ 6,00,000
Less: Cost of goods sold	$ 3,50,000
Ordinary income	$ 2,50,000
80% of ordinary income	$ 2,00,000

b. Good Corporation's end of the year AAA balance

Beginning AAA balance	$ 1,63,000
Add: Ordinary income	$ 2,00,000
Less: Long term capital loss	$ -5,000
Ending AAA balance	$ 3,68,000

Please like ( positive rating)

ekkarill92 answered 1 year ago

Ragan owns 65% of Nada stock (S-Corporation) throughout the year. Ragan’s beginning of the year stock...

Ragan owns 65% of Nada stock (S-Corporation) throughout the year. Ragan’s beginning of the year stock basis is $20,000. She has an additional stock purchase (investment) during the year of $10,000. She also loans the corporation $80,000 during the year. Nada S Corporation has beginning AAA of $250,000 and its Form 1120S shows the following information. 5 points Sales $500,000 Distribution to Ragan $30,000 Dividend Income $15,000 COGS $320,000 Business Fine/Penalty $50,000 Long term capital gain $25,000 Tax Exempt...

1. Lisa owns 70% of Doh’s stock (S-corporation) throughout the year. Lisa’s beginning of the year...

1. Lisa owns 70% of Doh’s stock (S-corporation) throughout the year. Lisa’s beginning of the year stock basis is $45,000. Lisa has an additional stock purchase (investment) this year of $10,000. Lisa loans the Corporation $5,000 this year. Doh Corporation has beginning AAA of $210,000. Doh Corporation’s Form 1120S shows the following information. Sales 400,000 Charitable contribution 9,500 Long Term Capital Loss 3,000 Tax Exempt Interest Income 1,500 Cost of Goods Sold 280,000 a. What is Lisa’s end of the...

fireball corporation is an s corporation, Leya owns all of the stock. During the current year....

fireball corporation is an s corporation, Leya owns all of the stock. During the current year. fireball earned a taxable income of 500000 and paid a 300000 distribution to Leyla. which of the following statement is correct a) fireball will pay corporate income tax in its earnings, and leyla will pay individual income tax on the distribution. b) only fireball will pay taxes, but leyla will not pay and taxes due to her holding in fireball C) fireball will not...

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...

P Corporation is a publicly held corporation which owns 10% of S Corporation’s stock. S Corporation...

P Corporation is a publicly held corporation which owns 10% of S Corporation’s stock. S Corporation has taxable income of $100,000 and distributes a $50,000 dividend to P. P has taxable income of $1,000,000 before the dividend. a. P’s corporate income tax is $345,100 on $1,015,000 of taxable income. S Corporation tax is $22,250 b. P’s corporate income tax is $345,100 and S’s corporate income tax is $34,000. c. P Corporation owes AMT. d. None of the above ***Explain answer.

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...

Phone Corporation owns 80 percent of Smart Company's stock. At the end of 20X8, Phone and...

Phone Corporation owns 80 percent of Smart Company's stock. At the end of 20X8, Phone and Smart reported the following partial operating results and inventory balances: Phone Corporation Smart Company Total sales $ 679,000 $ 519,000 Sales to Smart Company 150,500 Sales to Phone Corporation 250,500 Net income 31,000 Operating income (excluding investment income from Smart) 81,000 Inventory on hand, December 31, 20X8, purchased from: Smart Company 50,100 Phone Corporation 45,150 Phone regularly prices its products at cost plus a...

7) P Company owns 80% of the outstanding common stock of S Company. On January 1....

7) P Company owns 80% of the outstanding common stock of S Company. On January 1. 2018, S Company sold land to P Company for OMR 500,000. S Company originally purchased the land for OMR 300,000. On January 1, 2019, P Company Sold the land purchased from S Company to a company outside the affiliated group for OMR 600,000. A. Prepare the journal entry of intercompany sales. B. Prepare in general journal form the workpaper entries necessary because of the...

9) Padhy Corporation owns 80% of Abrams Corporation, Abrams Corporation owns 60% of Bacud Corporation, and...

9) Padhy Corporation owns 80% of Abrams Corporation, Abrams Corporation owns 60% of Bacud Corporation, and Bacud Corporation owns 10% of Abrams Corporation. The separate net incomes (excluding investment income) of Padhy, Abrams, and Bacud are $300,000, $100,000, and $80,000, respectively. Assume the investments were acquired at a cost equal to the book value of each investment, which also equals the fair value. Required: Calculate the controlling interest share of consolidated net income and the noncontrolling interest shares for Padhy...

Basu owns 100% of an S corporation. This year, the corporation paid Basu a salary of...

Basu owns 100% of an S corporation. This year, the corporation paid Basu a salary of $111,000. Basu's share of S corporation income for the year was $44,400. Assume that this is Basu's only income for the year. Compute any resulting payroll and self-employment income taxes. Assume the Social Security rate is 6.2% and Medicare rate is 1.45%. If an amount is zero, enter "0". If required, round your answers to nearest dollar. a. What amount is subject to employee...

Question