Question

In its first year of operation as an S Corp, the corporation had an ordinary business...

In its first year of operation as an S Corp, the corporation had an ordinary business income of $8,000. It also has a tax-exempt income of $1,000. The corporation had $2,000 of C Corp earnings and profits accumulated prior to the S Corp election. The shareholder basis in the shares at the beginning of that first S Corp year was $3,000. At the end of that year, The corporation distributes $8,500 to its sole shareholder. How is the distribution treated for tax purposes? Include in your answer the basis of the shares in the S Corp at the beginning of the year. following the year of the distribution.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In its first year of operation as an S Corp the corporation had ordinary business income...
In its first year of operation as an S Corp the corporation had ordinary business income of $8,000. It also has tax exempt income of $1,000. The corporation had $2,000 of C Corp earnings and profits accumulated prior to the S Corp election. The shareholder basis in the shares at the beginning of that first S Corp year was $3,000. At the end of that year The corporation distributes $8,500 to its sole shareholder. How is the distribution treated for...
in its first year of operation as an A corp the corporation had ordinary business income...
in its first year of operation as an A corp the corporation had ordinary business income of $8000. Iit also has tax exempt income of $1000. the corporation had $2000 of c corp earnings and profits accumulated prior to the s corp election. The shareholder basis in the shares at the beginning of that first year was $3000. At the end of that year the corporation distributes $8500 to its sole shareholder. How is the distribution treated for tax purposes?...
At the beginning of the year, Lewis, Inc. (an S corporation) had an $8,000 balance in...
At the beginning of the year, Lewis, Inc. (an S corporation) had an $8,000 balance in AAA. During the year, Lewis earned business income of $15,000 and distributed $30,000 to its sole shareholder (Jerry). Jerry's basis in his stock was $12,000 at the beginning of the year. How much of the this distributions will be treated as a capital gain to Jerry? A. $7,000 B. $0 C. $18,000 D. $3,000
During the year, Chelsie, the sole shareholder of a calendar year S corporation, received a distribution...
During the year, Chelsie, the sole shareholder of a calendar year S corporation, received a distribution from the S-corp of $33,000 in cash. At the end of last year, her stock basis was $9,000. The corporation earned $11,000 ordinary income during the year. The corporation has no accumulated E & P, from prior years, but does have a beginning of the year balance in AAA of $3,000. How is the distribution to Chelsie taxed on her federal income tax return?
At the beginning of the year, Myrna Corporation (a calendar year taxpayer) has E & P...
At the beginning of the year, Myrna Corporation (a calendar year taxpayer) has E & P of $66,050. The corporation generates no additional E & P during the year. On December 31, the corporation distributes $99,075 to its sole shareholder, Abby, whose stock basis is $19,815. How is the distribution treated for tax purposes? If an amount is zero, enter "0". As a result the distribution Abby has the following: • Dividend income: $ • Return of capital: $ •...
a U.S. Citizen, is a sole shareholder of S corporation. He has $5,000 basis in stock....
a U.S. Citizen, is a sole shareholder of S corporation. He has $5,000 basis in stock. also loaned money to S Corporation and has basis of $3,000. Assume no AEP, calendar year and beginning balance of AAA and OAA accounts are zero. The corp. made $10,000 in the ordinary income which was reported on K-1. Corp. also received a tax- free interest income of $4,000 which was also reported on K-1. Ryan took a distribution of $21,000 during the year...
S corporation had been a C corporation ( E & P $20,000). The AAA account for...
S corporation had been a C corporation ( E & P $20,000). The AAA account for the sole shareholder is $20,000. Shareholder’s basis in corporation is $20,000. Corporation distributes cash of $50,000. Explain the tax effect on the shareholder
Birch Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, James, who...
Birch Corp., a calendar-year corporation, was formed three years ago by its sole shareholder, James, who has operated it as an S corporation since its inception. Last year, James made a direct loan to Birch Corp. in the amount of $8,550. Birch Corp. has paid the interest on the loan but has not yet paid any principal. (Assume the loan qualifies as debt for tax purposes.) For the year, Birch experienced a $25,300 business loss. What amount of the loss...
Jack Slater is the sole shareholder of an S corporation. During 2018, Jack received a distribution...
Jack Slater is the sole shareholder of an S corporation. During 2018, Jack received a distribution of $20,000. His basis in the stock at December 31, 2017 was $3,000. The S corporation earned ordinary income of $12,000 in 2018. The corporation had no accumulated E & P. What should be the amount of return of capital for Jack?
On September 30, Marsh Corporation, a calendar year taxpayer, sold a parcel of land (basis of...
On September 30, Marsh Corporation, a calendar year taxpayer, sold a parcel of land (basis of $320,000) for an $800,000 note. The note is payable in four installments, with the first payment due next year. Because Marsh did not elect out of the installment method, none of the $480,000 gain is taxed this year. Marsh Corporation had a $150,000 deficit in accumulated E & P at the beginning of the year. Before considering the effect of the land sale, Marsh...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT