Rourke Enterprises is owned by Dallas. For the year, Rourke had net income per books of $450,000. This included the following items: Federal income tax expense $125,000 Bad Debt Expense1 $80,000 Rent $50,000 Meals $45,000 Depreciation expense2 $105,000 Dividends3 $50,000 1 This was calculated using the allowance method. Using specific write-off, this would have been $50,000. 2 Sum-of-the-years-digits method was used for book purposes. Had MACRS been used, depreciation expense would have been $125,000. Had straight-line been used, depreciation would have been $95,000. 3 These dividends were from Mavis, Inc. Jiminy owns 75% of Jepeto. During the year, Rourke pays Dallas distribution of $500,000. Dallas has a basis of $600,000 in her stock. What are the tax consequences of the distribution to Dallas? What basis will Dallas take in her stock after the distribution? Answer all subparts.correct answer will be upvoted.make it asap.
Rourke Enterprises is owned by Dallas. For the year, Rourke had net income per books of $450,000. This included the following items:
Federal income tax expense $125,000
Rent $50,000
Meals $45,000
Dividends3 $50,000
1 This was calculated using the allowance method. Using specific write-off, this would have been $50,000.
2 Sum-of-the-years-digits method was used for book purposes. Had MACRS been used, depreciation expense would have been $125,000. Had straight-line been used, depreciation would have been $95,000.
3 These dividends were from Mavis, Inc. Jiminy owns 75% of Jepeto.
During the year, Rourke pays Dallas distribution of $500,000. Dallas has a basis of $600,000 in her stock.
- What are the tax consequences of the distribution to Dallas?
- What basis will Dallas take in her stock after the distribution?
Answer all subparts.correct answer will be upvoted.make it asap.
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