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- E Corporation is a subchapter S corporation owned by three individuals with calendar year-ends. The corporation sells a sports drink as its principal product and has similar sales each month. What options does E Corporation have in choosing a tax year? E Corporation may choose any month end as its tax year. Because the owners of E Corporation have tax years ending in December, E Corporation must also choose a December year-end. E Corporation may choose an October, November, or December tax year-end. E Corporation may choose a tax year ending in September, October, or November, but only if the corporation also makes an annual cash deposit and adjusts the amount every year depending on the income deferred.B Corporation, a calendar year-end, accrual basis taxpayer, is owned 75 percent by Bonnie, a cash basis taxpayer. On December 31,2019, the corporation accrues interest of $4,000 on a loan from Bonnie and also accrues a $15,000 bonus to Bonnie. The bonus is paid to Bonnie on February 1,2020; the interest is not paid until 2021 . How much can B Corporation deduct on its 2019 tax return for these two expenses? $0 $4,000 $15,000 $19,000 $12,000X Corporation, registered under PEZA, enjoying 5% preferential tax rate. In 2019, X’s sales totaled 2,000,000 and cost of sale is 500,000. Operating expenses is 300,000. This was the result of registered activities of X Corporation in 2019. What is the income tax payable to BIR?
- Potato, an individual, is a 20 percent owner of Starch LLC. This year, Potato was allocated $45,000 of ordinary income from Starch LLC, $1,000 of tax-exempt interest income, and $2,000 of nondeductible expenses. Potato also received a $10,000 distribution from Starch LLC this year. At the beginning of the year, Starch LLC had outstanding debt of $100,000. At the end of the year, the entity's outstanding debts increased to $130,000. Required: a. If Starch LLC is taxed as a partnership, and her basis in her partnership interest at the beginning of the year is $30,000, determine Potato's tax basis in her partnership Interest at year-end. b. If Starch LLC is taxed as an S corporation, and her basis in her S corporation stock at the beginning of the year is $10,000, determine Potato's tax basis in her corporate stock at year-end. Complete this question by entering your answers in the tabs below. Required A Required B If Starch LLC is taxed as a partnership, and her basis in her partnership…Broken Rock LLC was recently formed with the following members: Name Tax Year-End Capital/ Profits % George Allen December 31 33.33% Elanax Corporation June 30 33.33% Elizabeth Cheam December 31 33.34% What is the required taxable year-end for Broken Rock LLC?XYZ Corporation (an S corporation) is owned by Jane and Rebecca, who are each 50 percentshareholders. At the beginning of the year, Jane's basis in her XYZ stock was $49,000. XYZreported the following tax information for 2022.Description AmountSales revenue $ 721,000Cost of goods sold (209,000)Long-term capital gain 17,000Dividend income 18,500Tax-exempt interest 12,000Salary to owners (129,000)Employee wages (59,000)Depreciation expenses (11,100)Miscellaneous expenses (12,250)Overall net income $ 348,150Required:a. What amount of ordinary business income is allocated to Jane?b. What is the amount and character of separately stated items allocated to Jane?c. What is Jane's basis in her XYZ Corporation stock at the end of the year?
- At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E & P of $100,000. Blue's current E & P is $60,000, and at the end of the year, it distributes $200,000 ($100,000 each) to its equal shareholders, Pooja and Jon. Pooja's stock basis is $11,000; Jon's stock basis is $26,000. How is the distribution treated for tax purposes? If an amount is zero, enter "0". Pooja has the following:Dividend income: $Capital gain: $Stock basis after distribution: $ Jon has the following:Dividend income: $Capital gain: $Stock basis after distribution:[The following information applies to the questions displayed below.] Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $10,000 from Falcons Corporation. Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Interest income (related to business income) Municipal bond income. Government fines Overall net income. Distributions Show Transcribed Text Ordinary Income Section 179 expense a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis). Municipal bond income Unadjusted basis of qualified property Allocated wages Distributions Qualified business income…Styling Shoes, LLC, filed its 20X8 Form 1065 on March 15, 20X9. Styling had three members with the following ownership interests and tax bases at the beginning of 20X8: (1) Jane, a member with a 25 percent profits and capital interest and a $9,500 outside basis, (2) Joe, a member with a 45 percent profits and capital interest and a $14,500 outside basis, and (3) Jack, a member with a 30 percent profits and capital interest and a $6,500 outside basis. The following items were reported on Styling's Schedule K for the year: ordinary income of $109,000, Section 1231 gain of $19,500, charitable contributions of $29,500, and tax-exempt income of $7,500. In addition, Styling received an additional bank loan of $16,500 during 20X8. What is Jane's tax basis after adjustment for her share of these items?
- MKJ company is 80% owned by David. On January 1 of the current year, MKJ makes a loan of $53,000 to David. The loan carries an interest rate of 4%. The prescribed rate of interest at the time of the loan is 6%. The loan requires that David make annual payments of $21,200, starting in the following taxation year, until the balance is repaid. How much will David recognize in Net Income for Tax purposes related to the loan in the current year? A. 54000 B. 31800 c. 53000 d. 1372At the beginning of the tax year, Melodie's basis in the MIP LLC was $64,000, including her $41,600 share of the LLC's liabilities. At the end of the year, MIP distributed to Melodie cash of $9,600 and inventory (basis of $7,680, fair market value of $9,600). In addition, MIP repaid all of its liabilities by the end of the year. a. If this is a proportionate current distribution, what is the tax effect of the distribution to Melodie and MIP? After the distribution, what is Melodie's basis in the inventory and in her MIP interest? If this is a proportionate current distribution, the cash distribution plus relief of liabilities Melodie's basis to After the distribution of inventory, what is Melodie's basis in the inventory and in her MIP interest? Basis in inventory Basis in MIP b. Would your answers to part (a) change if this had been a proportionate liquidating distribution? If this had been a proportionate liquidating distribution, then Melodie would have recognized a of $ and her…Styling Shoes, LLC filed its 20X8 Form 1065 on March 15, 20x9. Styling had three members with the following ownership interests and tax basis at the beginning of the 20x8: (1) Jane, a member with a 25% profits and capital interest and a $15,000 outside basis, (2) Joe, a member with a 45% profits and capital interest and a $20,000 outside basis, and (3) Jack, a member with a 30% profits and capital interest and a $12,000 outside basis. The following items were reported on Stlying's Schedule K for the year: ordinary income of $120,000. Section 1231 gain of $25.000, charitable contributions of $35,000, and tax-exempt income of $13,000. In addition, Styling received an additional bank loan of $22,000 during 20x8. What is Jane's tax basis after adjustment for her share of these items? Multiple Choice ___ $45,750. ___ $51,250. ___ $55,500. ___ $85,250.