Question

Question: Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75...

Question: Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent, respectively. ... Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent, respectively. UpAHill Corporation (an S corporation) Income Statement December 31, Year 1 and Year 2 Year 1 Year 2 Sales revenue $ 175,000 $ 310,000 Cost of goods sold (60,000 ) (85,000 ) Salary to owners Jack and Jill (40,000 ) (50,000 ) Employee wages (15,000 ) (20,000 ) Depreciation expense (10,000 ) (15,000 ) Miscellaneous expenses (7,500 ) (9,000 ) Interest income (related to business) 2,000 2,500 Qualified dividend income 500 1,000 Overall net income $ 45,000 $ 134,500 a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Ordinary income and qualified business income for both years?

Homework Answers

Answer #1

Year 1

Ordinary Income $45,000: $11250 ($45,000 x 25%) allocated to Jack and $33,750 ($45,000 x 75%) allocated to Jill

Separately stated items:

Interest income $2,000; $500 allocated to Jack and $1,500 to Jill.

Dividend income $500; $125 allocated to Jack and $375 allocated to Jill.

Year 2:

Ordinary Income $134,500; $33,625 ($134,500 x 25%) allocated to Jack and $100,875 $134,500 x 75%) allocated to Jill

Separately stated items:

Interest income $2,500; $625 allocated to Jack and $1,875 to Jill.

Dividend income $1,000; $250 allocated to Jack and $750 allocated to Jill.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Question: Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75...
Question: Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent, respectively. ... Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent, respectively. UpAHill Corporation (an S corporation) Income Statement December 31, Year 1 and Year 2 Year 1 Year 2 Sales revenue $ 175,000 $ 310,000 Cost of goods sold (60,000 ) (85,000 ) Salary to owners Jack and Jill (40,000 ) (50,000 ) Employee wages...
Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent,...
Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent, respectively. UpAHill Corporation (an S corporation) Income Statement December 31, Year 1 and Year 2 Year 1 Year 2 Sales revenue $ 175,000 $ 310,000 Cost of goods sold (60,000 ) (85,000 ) Salary to owners Jack and Jill (40,000 ) (50,000 ) Employee wages (15,000 ) (20,000 ) Depreciation expense (10,000 ) (15,000 ) Miscellaneous expenses (7,500 ) (9,000 ) Interest income (related...
Jack and Jill Uphill are the shareholders of JJ Art, Inc., an S corporation which conducts...
Jack and Jill Uphill are the shareholders of JJ Art, Inc., an S corporation which conducts business as an art gallery in Miami Beach, FL. The corporation was formed in 1986, and the corporation has always been an S corporation. JJ Art, Inc. also owns the real estate used in the business. Jill inherited the land from her grandfather upon his death in 1985, and she transferred the property to the corporation solely in exchange for stock of the corporation...
Jack Corporation is owned 75% by Sherri and 25% by Mark. Sherri and Mark have $125,000...
Jack Corporation is owned 75% by Sherri and 25% by Mark. Sherri and Mark have $125,000 and $50,000 bases in their stock, respectively. Jack Corporation adopts a plan of liquidation on March 1. On April 12, Sherri receives the following property as a liquidating distribution: cash of $30,000; land, $125,000 FMV; and 150 shares of Green Corporation stock, $30,000 FMV. The land is subject to a $20,000 mortgage. On the same date, Mark receives $10,000 FMV of Green stock (50...
TCO (F) Sara Inc. is a calendar-year S corporation with four shareholders who each own 25...
TCO (F) Sara Inc. is a calendar-year S corporation with four shareholders who each own 25 shares of stock. All shareholders purchased their stock for $5,000. Mr. D, one of the shareholders, made loans to the corporation of $7,000 and $6,000 on August 1, 2016, and June 15, 2017, respectively. Mr. D also guaranteed Sara’s $20,000 bank loan of $20,000. Sara Inc. had $9,000 ordinary income on December 31, 2016. Both shareholders reported their share of the corporation's income on...
11. Bread Corporation is a C corporation with earnings of $150,000. It paid $60,000 of dividends...
11. Bread Corporation is a C corporation with earnings of $150,000. It paid $60,000 of dividends to its sole shareholder, Gerald. Gerald also owns 100% of Butter, an S Corporation. Butter had net taxable income of $40,000 and made a $30,000 distribution to Gerald. What total income will Gerald report from Bread and Butter’s activities?        $90,000        $190,000        $150,000        $100,000 12. At the first of the year, Arch and Bean contribute cash equally...
2 . Identify which of the following statements is true: If an S Corporation has no...
2 . Identify which of the following statements is true: If an S Corporation has no accumulated earnings and profits, the amount distributed to a shareholder will not increase the shareholder's basis in the stock        If a C Corporation does not distribute its income to its shareholders, double taxation of the income will occur.        C Corporation operating losses are deductible by the individual shareholders        S Corporation operating losses are never deductible by the individual...
Tremaine would like to organize UTA as either an S Corporation or a C corporation. In...
Tremaine would like to organize UTA as either an S Corporation or a C corporation. In either form, the entity will generate a 9 percent annual before-tax return on a $1,000,000 investment. Tremaine’s marginal income tax rate is 37 percent, and his tax rate on dividends and capital gains is 23.8 percent (including the net investment income tax). If Tremaine organizes UTA as an S corporation, he will be allowed to claim the deduction for qualified business income. Also, because...
Tremaine would like to organize UTA as either an S Corporation or a C corporation. In...
Tremaine would like to organize UTA as either an S Corporation or a C corporation. In either form, the entity will generate a 9 percent annual before-tax return on a $1,000,000 investment. Tremaine’s marginal income tax rate is 37 percent and his tax rate on dividends and capital gains is 23.8 percent (including the net investment income tax). If Tremaine organizes UTA as an S corporation he will be allowed to claim the deduction for qualified business income. Also, because...
Tremaine would like to organize UTA as either an S Corporation or a C corporation. In...
Tremaine would like to organize UTA as either an S Corporation or a C corporation. In either form, the entity will generate a 9 percent annual before-tax return on a $1,000,000 investment. Tremaine’s marginal income tax rate is 37 percent and his tax rate on dividends and capital gains is 23.8 percent (including the net investment income tax). If Tremaine organizes UTA as an S corporation he will be allowed to claim the deduction for qualified business income. Also, because...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT