1.Suppose at the beginning of 2018, Jamaal's basis in his S corporation stock is $1,000, and he has a $10,000 debt basis associated with a $10,000 loan he made to the S corporation. In 2018, Jamaal's share of S corporation income is $4,000, and he received a $7,000 distribution from the S corporation. How much income does Jamaal report in 2018 from these transactions? Multiple Choice
e.None of the choices are correct.
2. Which of the following is true regarding state and local taxes?
a.All states impose a state income tax.
b.Every jurisdiction imposes a sales or use tax.
c.The primary purpose of state and local taxes is to raise revenue.
d.Property taxes are primarily used to finance a State's general revenue fund.
3.Which of the following sales is always subject to sales and use tax in a state that assesses a sales and use tax?
a.Tax preparation services.
1. Ordinary income = $4000
New stock basis = $1000 + $4000 = $5000
Distribution in excess of stock basis
= $7000 - $5000 = $2000
Total income = $4000 + $2000 = $6000
Answer is option C.
2. Answer is option C. Primary purpose is to increase revenue.
Not all states have local tax or sales tax. And all these tax used for community expenses.
3. Answer is option C. Inventory. Because other three are exempted subject to certain condition.
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