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 sales revenue Cost of goods sold salary to owners Jack and Jill Employee wages Depreciation expense Miscellaneous expenses Interest income (related to business) Qualified dividend income Overall net income Year 1 Year 2 $175,000 $310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) (7,500) (9,000) 2,000 2,500 500 1,000 $ 45,000 $ 134,500 What amount of ordinary Income and separately stated items are allocated to them for years 1 and 2 based on the Information bove? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Ordinary income Dividend income Jack Jill Year 1 Year 2 Year 1 Year 2 Qualified business income Allocated wages Unadjusted basis of qualified property Assume Jack and Jill, 25 and 75 percent shareholders, respectively, in UPAHill Corporation, have tax bases in their shares at the beginning of year 1 of $24,000 and $56,000, respectively. Also, assume no distributions were made. Given the Income statement below, what are their tax bases in their shares at the end of year 1? UPAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 sales revenue Cost of goods sold salary to owners Jack and Jill Employee wages Depreciation expense Miscellaneous expenses Interest income (related to business) Qualified dividend income Overall net income Jack Jill Tax Basis at the end of Year 1 Year 1 $175,000 (60,000) Year 2 $310,000 (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) (7,500) 2,000 500 (9,000) 2,500 1,000 $ 45,000 $ 134,500
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 sales revenue Cost of goods sold salary to owners Jack and Jill Employee wages Depreciation expense Miscellaneous expenses Interest income (related to business) Qualified dividend income Overall net income Year 1 Year 2 $175,000 $310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) (7,500) (9,000) 2,000 2,500 500 1,000 $ 45,000 $ 134,500 What amount of ordinary Income and separately stated items are allocated to them for years 1 and 2 based on the Information bove? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Ordinary income Dividend income Jack Jill Year 1 Year 2 Year 1 Year 2 Qualified business income Allocated wages Unadjusted basis of qualified property Assume Jack and Jill, 25 and 75 percent shareholders, respectively, in UPAHill Corporation, have tax bases in their shares at the beginning of year 1 of $24,000 and $56,000, respectively. Also, assume no distributions were made. Given the Income statement below, what are their tax bases in their shares at the end of year 1? UPAHill Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 sales revenue Cost of goods sold salary to owners Jack and Jill Employee wages Depreciation expense Miscellaneous expenses Interest income (related to business) Qualified dividend income Overall net income Jack Jill Tax Basis at the end of Year 1 Year 1 $175,000 (60,000) Year 2 $310,000 (85,000) (40,000) (50,000) (15,000) (20,000) (10,000) (15,000) (7,500) 2,000 500 (9,000) 2,500 1,000 $ 45,000 $ 134,500
Chapter15: Taxing Business Income
Section: Chapter Questions
Problem 36P
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Transcribed Image Text: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
Sales revenue
Cost of goods sold
salary to owners Jack and Jill
Employee wages
Depreciation expense
Miscellaneous expenses
Interest income (related to business)
Qualified dividend income
Overall net income
Year 1.
Year 2
(60,000)
$175,000 $310,000
(85,000)
(40,000) (50,000)
(15,000) (20,000)
(10,000) (15,000)
(7,500)
(9,000)
2,000
2,500
500
1,000
$ 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
Dividend income
Jack
Jill
Year 1
Year 2
Year 1
Year 2
Qualified business income
Allocated wages
Unadjusted basis of qualified property
Assume Jack and Jill, 25 and 75 percent shareholders, respectively, in UpAHill Corporation, have tax bases in their shares at the
beginning of year 1 of $24,000 and $56,000, respectively. Also, assume no distributions were made. Given the income statement
below, what are their tax bases in their shares at the end of year 1?
UPAHill Corporation (an s Corporation)
Income Statement
December 31, Year 1 and Year 2
Sales revenue
Cost of goods sold
Salary to owners Jack and Jill
Employee wages
Depreciation expense
Miscellaneous expenses
Interest income (related to business)
Qualified dividend income
Overall net income
Year 1
$175,000
Year 2
$310,000
(60,000)
(85,000)
(40,000)
(50,000)
(15,000)
(20,000)
(10,000) (15,000)
(7,500)
(9,000)
2,000
2,500
500
1,000
$ 45,000 $134,500
Jack
Jill
Tax Basis at the end of Year 1
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