Question

The company FPA has the following income, expense, and loss items for the current year.

Sales $850,000
Tax-exempt interest $40,000
Long-term capital gain $85,000
Short-term capital loss $35,000
Passive activity loss $20,000
Cost of goods sold $480,000
Depreciation $40,000
Section 179 expense $50,000
Other operating expenses $200,000
Net operating loss (from previous year) $24,000
Prepare a calculation of taxable income for the following scenarios and indicate the tax form(s) to report the business activity:
 Sole proprietorship
 Partnership equally owned by Vinnie and Chandra
 Corporation owned by Kim
 S corporation owned equally by Henry, Iris, and Jasmine

Primarily the Tax information for the S-corporation, under the most recent tax law

Answer 1

Corporation Owned by KIM				Sole Proprietorship				PartnerShip
Computation of Net Operating Income				Computation of Net Operating Income				Computation of Net Operating Income
Particular		Amount		Particular		Amount		Particular		Amount
Sales		850,000		Sales		850,000		Sales		850,000
Less Cost of Goods Sold		480,000		Less Cost of Goods Sold		480,000		Less Cost of Goods Sold		480,000
Gross Margin		370,000		Gross Margin		370,000		Gross Margin		370,000
LessDepreciation Expense	40,000			LessDepreciation Expense	40,000			LessDepreciation Expense	40,000
Section 179 Expense	50,000			Section 179 Expense	50,000			Section 179 Expense	50,000
Other Operating Expense	$200,000	-290,000		Other Operating Expense	$200,000	-290,000		Other Operating Expense	$200,000	-290,000
Net Operating Income		80,000		Net Operating Income		80,000		Net Operating Income		80,000
Computation of Taxable Income				Computation of Taxable Income				Computation of Taxable Income
Net Operating Income Current Period		80000		Business Income		80000		Business Income		80000
Net Operating Loss Previous Year		-24000		Net Operating Loss Previous Year		-24000		Net Operating Loss Previous Year		-24000
Net Business Income		56000		Net Business Income		56000		Net Business Income		56000
Capital Gain,net				Capital Gain,net				Capital Gain,net
Long Term Capital Gain	85000			Long Term Capital Gain	85000			Long Term Capital Gain	85000
Short Term Capital Loss	-35000			Short Term Capital Loss	-35000	50000		Short Term Capital Loss	-35000	50000
Passive Activity Loss	-20000	30000		Taxable Income		106000		Taxable Income		106000
Taxable Income		86000
Form 1120				Form 1040				Form1065