On January 1, Year 1, Ginger, an individual, paid $23,000 for 6 percent of the stock in Root Corp., an S corporation. In November Year 1, he loaned $11,000 to Root Corp. in return for a promissory note. Root Corp. generated a $680,000 operating loss in Year 1. Root Corp. generated $416,000 ordinary business income in Year 2. Required: a. How much of Ginger's share of this income is included in his Year 2 taxable income? b. Compute Ginger's basis in his Root Corp. stock and his Root Corp. note at the end of Year 2. c. How would your answers to parts a and b change if Root Corp.'s ordinary business income was only $228,000? Complete this question by entering your answers in the tabs below. Req A and B Req C How would your answers to parts a and b change if Root Corp.'s ordinary business income was only $228,000? Taxable income Amount $ 6,880 Adjusted basis Root Stock $ 0 Root Note $ 0 < Req A and B Req C >

On January 1, Year 1, Ginger, an individual, paid $23,000 for 6 percent of the stock in Root Corp., an S corporation. In November Year 1, he loaned $11,000 to Root Corp. in return for a promissory note. Root Corp. generated a $680,000 operating loss in Year 1. Root Corp. generated $416,000 ordinary business income in Year 2. Required: a. How much of Ginger's share of this income is included in his Year 2 taxable income? b. Compute Ginger's basis in his Root Corp. stock and his Root Corp. note at the end of Year 2. c. How would your answers to parts a and b change if Root Corp.'s ordinary business income was only $228,000? Complete this question by entering your answers in the tabs below. Req A and B Req C How would your answers to parts a and b change if Root Corp.'s ordinary business income was only $228,000? Taxable income Amount $ 6,880 Adjusted basis Root Stock $ 0 Root Note $ 0 < Req A and B Req C >

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter20: Corporations And Parterships

Section: Chapter Questions

Problem 45P

See similar textbooks

Similar questions

On January 1, Year 1, Carrot, an individual, paid $17,500 for 5 percent of the stock in Root Corp., an S corporation. In November, he loaned $8,900 to Root Corp. in return for a promissory note. Root Corp. generated a $860,000 operating loss in Year 1. Required: a. How much of his share of the loss can Carrot deduct on his Year 1 return? b. Compute Carrot's basis in his Root Corp. stock and his Root Corp. note at the end of Year 1. Complete this question by entering your answers in the tabs below. Required A Required B How much of his share of the loss can Carrot deduct on his Year 1 return? Deduction
On January 1, Year 1, Radish, an individual, paid $15,000 for 5 percent of the stock in Root Corp., an S corporation. In November Year 1, he loaned $8,000 to Root Corp. in return for a promissory note. Root Corp. generated a $600,000 operating loss in Year 1. Root Corp. generated $220,000 ordinary business income in Year 2. In Year 3, Root Corp. repaid its $8,000 debt to Radish before he restored any basis in the debt. Required: How much gain or loss, if any, will Radish recognize as a result of the debt repayment in Year 3?
On January 1, Year 1, Ginger, an individual, paid $25,000 for 6 percent of the stock in Root Corp., an S corporation. In November Year 1, he loaned $13,000 to Root Corp. in return for a promissory note. Root Corp. generated a $800,000 operating loss in Year 1. Root Corp. generated $428,000 ordinary business income in Year 2. Required: How much of Ginger’s share of this income is included in his Year 2 taxable income? Compute Ginger’s basis in his Root Corp. stock and his Root Corp. note at the end of Year 2. How would your answers to parts a and b change if Root Corp.’s ordinary business income was only $240,000?
Check my work Kaiwan, Inc., a calendar year S corporation, is partly owned by Sharrod, whose beginning stock basis is $32,000. During the year, Sharrod’s share of a Kaiwan long-term capital gain (LTCG) is $5,000, and his share of an ordinary loss is $18,000. Sharrod then receives a $20,000 cash distribution. Compute the following. What is Sharrod’s new basis in the Kaiwan stock? Beginning Basis 32000 Add Long -term cap gain 5000 Less Distribution -20000 Deductible loss -17000 Basis in stock 0 Stock basis is 0
On January 1, Year 1, Carrot, an individual, paid $24,000 for 5 percent of the stock in Root Corp., an S corporation. In November, he loaned $12,500 to Root Corp. in return for a promissory note. Root Corp. generated a $896,000 operating loss in Year 1. Required: How much of his share of the loss can Carrot deduct on his Year 1 return? Compute Carrot’s basis in his Root Corp. stock and his Root Corp. note at the end of Year 1.
Marathon Inc. (a C corporation) reported $1,650,000 of taxable income in the current year. During the year, it distributed $165,000 as dividends to its shareholders as follows: (Leave no answer blank. Enter zero if applicable.) $8,250 to Guy, a 5 percent individual shareholder. $24,750 to Little Rock Corp., a 15 percent shareholder (C corporation). $132,000 to other shareholders. a. How much of the dividend payment did Marathon deduct in determining its taxable income? b. Assuming Guy's marginal ordinary tax rate is 37 percent, how much tax will he pay on the $8,250 dividend he recieved from Marathon Inc. c. What amount of tax will Little Rock Corp.pay on the $24,750 dividend it recieved from Marathon Inc. (50 percent dividends recieved deduction)?
K sold 1,000 shares of a public company for $8,000. Before the sale, K owned 5,000 shares; an initial 3,000 were purchased for $10,000 and an additional 2,000 were purchased for $10,000 twenty days before the sale. What amount is to be reported in net income for tax purposes? $