11-39 Allocation of Income to Shareholders. Toyland Corporation, an S corporation, uses the calendar year as its tax year. Bob, Alice, and Carter own 60, 30, and 10 shares, respec-tively, of the Toyland stock. Carter's basis for his stock is $26,000 on January 1 of the current year (assume a non-leap year). On June 30, Alice gifted one-half of her stock to Mike. On November 30, Carter sold his stock to Mike for $45,000. Toyland reports the following results for the current year: Ordinary income Long-term capital loss Charitable contributions $120,000 10,000 6,000 a. What amount of income, loss, or deduction do the four shareholders report (assuming the corporation makes no special allocation election)? b. What gain or loss does Carter recognize when he sells the Toyland stock?
11-39 Allocation of Income to Shareholders. Toyland Corporation, an S corporation, uses the calendar year as its tax year. Bob, Alice, and Carter own 60, 30, and 10 shares, respec-tively, of the Toyland stock. Carter's basis for his stock is $26,000 on January 1 of the current year (assume a non-leap year). On June 30, Alice gifted one-half of her stock to Mike. On November 30, Carter sold his stock to Mike for $45,000. Toyland reports the following results for the current year: Ordinary income Long-term capital loss Charitable contributions $120,000 10,000 6,000 a. What amount of income, loss, or deduction do the four shareholders report (assuming the corporation makes no special allocation election)? b. What gain or loss does Carter recognize when he sells the Toyland stock?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:11-39
Allocation of Income to Shareholders. Toyland
Corporation, an S corporation, uses the calendar
year as its tax year. Bob, Alice, and Carter own
60, 30, and 10 shares, respec-tively, of the
Toyland stock. Carter's basis for his stock is
$26,000 on January 1 of the current year
(assume a non-leap year). On June 30, Alice
gifted one-half of her stock to Mike. On
November 30, Carter sold his stock to Mike for
$45,000. Toyland reports the following results
for the current year:
Ordinary income
Long-term capital loss Charitable contributions
$120,000 10,000 6,000
a. What amount of income, loss, or deduction do
the four shareholders report (assuming the
corporation makes no special allocation
election)?
b. What gain or loss does Carter recognize when
he sells the Toyland stock?
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