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 year stock basis?

b. What is Doh Corporation’s end of the year AAA balance?

Expert Solution

a. Lisa's end of the year stock basis

Lisa's beginning of the year stock basis	$45,000
Add: Addittional stock purchase this year	$10,000
70% of ordinary income	$84,000
Tax exempt interest income (70%)	$1,050
Less: Charitable contribution (70%)	($6,650)
Long term capital loss (70%)	($2,100)
Lisa's end of the year stock basis	$131,300

Lisa's debt basis
Lisa loan the corporation this year	$5,000

Working note:
Ordinary income
Sales	$400,000
Less: Cost of goods sold	$280,000
Ordinary income	$120,000
70% of ordinary income	$84,000

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

Beginning AAA balance	$210,000
Add: Ordinary income	$120,000
Less: Long term capital loss	($1,500)
Ending AAA balance	$328,500

ekkarill92 answered 1 year ago

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