A shareholder loaned $100,000 to the S Corp in TY2021 which was repaid in TY2022. Discuss the appropriate recording of the loan transactions for both years and the effect on shareholder basis for both years. State the applicable rules that apply to this situation.

Carla Vista Company purchased 200 of the 1000 outstanding shares of Metlock Company's common stock for $550000 on January 2, 2021. During 2021, Metlock Company declared dividends of $75000 and reported earnings for the year of $350000.If Carla Vista Company used the fair value method of accounting for its investment in Metlock Company, its Equity Investments (Metlock) account on December 31, 2021 should be   $605000.     $620000.     $550000.     $535000.

On January 1, 2023, Kinney, Inc., an S corporation, reports $4,000 of accumulated E & P and a balance of $10,000 in AAA. Kinney has twor shareholders, Erin and Frank, each of whom owns 500 shares of Kinney's stock. Kinney's nonseparately stated ordinary income for the year is $5,000. Kinney distributes $6,000 to each shareholder on July 1, and it distributes another $3,000 to each shareholder on December 21. How are the shareholders taxed on the distributions? Ignore the 20% QBI deduction. Round any division to five decimal places. If required, round final answers to the nearest dollar. Erin and Frank each report December 21 distribution. Assuming tax-free 1,000 dividend income for the July 1 distribution and s X each for the that the shareholders have sufficient basis in their stock, Erin and Frank each receive a X distribution from AAA.

Company A entered into a contract to purchase the assets of Company B except for cash, accounts receivable. Company A will provide Company B with enough funds to cover the liquidation of the business including accrued expenses. Under the contract, only the amount to pay out the loan was required at settlement. The balance is to be paid within 30 days of settlement. Company A will issue Company B shareholders one of its shares for every 5 of their Company B shares. Settlement occurred on 1 July 2022. Company A shares were valued at $12.25 per share. Company A incurred $9,000 in acquisition related expenses and $15,100 in share issue costs. Attached is a list of net fair value of assets and liabilities as estimated by Company A. The following costs also need to be covered by Company A Accrued employee benefits $43,000 Accrued loan interest to 1 July 2022 $15,680 Other accrued expenses $7,862 Other liquidation costs $8,920 1) Prepare and the acquisition analysis related journal entries of…

Tennis, Corporation, a calendar-year corporation,  had a deficit in accumulated earnings and profits of $(800,000) and a positive balance in current earnings and profits of $100,000.  On December 31, 2021, Tennis, Corporation distributed a building to Darrel, its sole shareholder.  The building had a fair market value of $500,000 and an adjusted basis to the corporation of $150,000.  Darrel also assumed the $300,000 mortgage on the building.  Darrel is in the 37% tax bracket .   Determine the tax consequences to Darrel from this distribution of building and mortgage. Be specific—and show your calculations. What are the tax consequences to Tennis, Corporation from this distribution? After this distribution, what are the earnings and profits of Tennis, Corporation?

Exercise 28-12 (LO. 1) The entity reports the following transactions for the 2022 tax year. The trustee accumulates all accounting income for the year. Operating income from a business Dividend income, all from U.S. corporations (20% tax rate) Interest income, City of San Antonio bonds Trustee fees, deductible portion Net rental losses, passive activity $500,000 30,000 40,000 (15,000) (100,000) Click here to access tax table for this problem. Carryout the tax computations to two decimal places and round the final tax liability to the nearest dollar. Compute the Federal income tax liability for the Valerio Trust by providing the following amounts: The amount of the trustee's gross income taxed at 20% for the Valerio Trust is $ The Trustee taxable income taxed at ordinary rates for the Valerio Trust is The Federal income tax liability for the Valerio Trust is $

On January 1, 2020, Concord Corporation had cash and common shares of $80,000. At that date, the company had no other asset, liability, or shareholders’ equity balances. On January 2, 2020, Concord Corporation paid $60,000 cash for equity securities that it designated as fair value through other comprehensive income (FV-OCI) investments. During the year, Concord Corporationreceived non-taxable cash dividends of $26,000 and had an unrealized holding gain of $21,000 (net of tax) on these securities. Determine the following amounts for 2020: (a)   Net Income / (Loss)   $enter a dollar amount (b)   Other Comprehensive Income   $enter a dollar amount (c)   Comprehensive Income   $enter a dollar amount (d)   Accumulated Other Comprehensive Income (as at the end of 2020)   $enter a dollar amount

Presented below is selected information related to the financial instruments of Novak Company at December 31, 2025. This is Novak Company's first year of operations. Carrying Amount Fair Value (at December 31) Investment in debt securities (intent is to hold to maturity) $42,600 $43,500 Investment in Chen Company stock 737,000 856,500 Bonds payable 241,500 217,100 (a) Novak elects to use the fair value option for these investments. Assuming that Novak's net income is $108,000 in 2025 before reporting any securities gains or losses, determine Novak's net income for 2025. Assume that the difference between the carrying value and fair value is due to credit deterioration. Novak's net income for 2025 $ 228,400 (b) Record the journal entry, if any, necessary at December 31, 2025, to record the fair value option for the bonds payable. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is…

Presley Corp., a calendar-year corporation, was formed four years ago by its sole shareholder, Smith, who has always operated it as a C corporation.  However, at the beginning of 2020, Smith made a qualifying S election for Presley Corp., effective January 1.  Presley Corp. reported $140,000 of C corporation earnings and profits on the effective date of the S election.  In 2020 (its first S corporation year), Presley Corp. reported business income of $100,000.  Smith’s basis in his Presley Corp. stock at the beginning of 2020 was $30,000.  What are the amount and character of gain Smith must recognize on the following distributions scenarios, and what is his basis in his Presley Corp. stock at the end of the year? Smith received a $80,000 distribution from Presley Corp. at the end of the year. Smith received a $260,000 distribution from Presley Corp. at the end of the year. Smith received a $300,000 distribution from Presley Corp. at the end of the year.

On January 1, 2021, an investor company acquired 25% of an investee company's common stock for $2,880,000. As a result of this transaction, the investor can exert significant influence over the investee. During each year ended December 31, 2021 and 2022 the investee reported $576,000 of net income and $240,000 of dividends. On January 1, 2021, the book value of the investee's net assets was $9,600,000 and all individual net assets had appraised fair values that equaled their reported book values. On December 31, 2022, what is the balance of the Equity Investment account on the Investor's balance sheet? Select one: a. $3,048, 000 b. $2,880,000 c. $3,552,000 d. $2,964,000