Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporatic year 1, Julio and Milania each received distributions of $10,000 from Falcons Corporation. Falcons Corporation (an s corporation) Income Statement December 31, Year 1 and Year 2 Year 1 Year 2 $ 320,000 (41,000) (40,000) (30,000) (17,000) $ 450,000 (62,000) (80,000) (60,000) (34,000) (50,000) 18,500 Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Interest income (related to business income) Municipal bond income (30,000) 10,000 1,700 4,400 (2,000) $ 184,900 Government fines Overall net income $ 173,700 Distributions $ 20,000 $ 50,000 a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information Assume that Falcons Corporation has $220,000 of qualified property (unadjusted basis). Allocated to Allocated to Amount Julio Milania Ordinary Income Section 179 expense Qualified business income Municipal bond income Distributions Allocated wages Unadjusted basis of qualified property

he Whitewater LLP is equally owned by three partners and shows the following balance sheet at the end of the current tax year.   Basis   FMV Cash $81,000 $81,000 Unrealized receivables 0 27,000 Land 27,000 108,000   $108,000 $216,000 Petula, capital $36,000 $72,000 Prudence, capital 36,000 72,000 Primrose, capital 36,000 72,000   $108,000 $216,000   Partner Petula is an active (i.e., "general") partner retiring from the service-oriented partnership. She receives $81,000 cash, none of which is stated to be for goodwill. a.  How much of the payment is for "unstated goodwill"?   b.  How is the $81,000 allocated between a § 736(a) income payment and a § 736(b) property payment? The $81,000 cash payment is allocated as follows:§ 736(a) income payment: § 736(b) property payment:

Helen owns 30% of a flow-through entity.  The capital gain comes from the sale of a piece of equipment that Helen contributed to the entity.  At the time of contribution, the piece of equipment had a basis of $45,000 and a fair market value of $50,000.  The entity reports the following amounts before any payments to the owners:   O/S      Item                                                     Amount Sales Revenue                                     30,000             Dividends received                             10,000 Tax-exempt interest income               15,000 Capital gain                                           5,000 Charitable contributions                       1,000 Cost of Goods Sold                             10,000 General Business Expenses                  3,000   a) In the O/S column above, write ‘O’ for any ordinary business items and write ‘S’ for any separately stated items.   b) Assume that the entity is an S-Corp, and that Helen is also an employee of the…

George and Nancy form EB Corporation. George transfers land (basis of $100 and fair market value of S110) for 10 shares plus $10 cash. Nancy transfers $5 cash for 2 shares in EB Corporation, what gains do george and Nancy recognize, what is the stock basis

To acquire a 1/3 interest in the T LLC (a partnership), on January 1 of this year D contributed some land he held for investment.  He purchased the land for $120,000.  Unfortunately, the land decreased in value and was only worth $90,000 on the date of contribution.  A few years later, T LLC sells the land for $84,000.  At the beginning of that year, D's capital account was $200,000.   Compute the gain or loss to T LLC when it sold the land_____________________       Compute the capital account for D immediately after the sale________________

Facts: Ellie and Linda are equal owners in Otter Enterprises, a calendar year business. Ellie has a basis in Otter Enterprises of $80,000 at the beginning of the year. Linda has a basis in Otter Enterprises of $60,000 at the beginning of the year. Assume that Otter Enterprises has no debt. Otter Enterprises has $320.000 of gross income and $210.000 of operating expenses. In addition. Otter has a long-term capital gain of $15.000 and makes distributions to Ellie and Linda of $25,000 each. Required: Discuss the impact of this information on the taxable income of Otter. Ellie, and Linda if Otter is: A. A partnership. B. An S corporation. C. AC corporation. Include in your discussion (1) the amount and character of any income recognized by Ellie, Linda, and Otter (including Otter's taxable income and the amount of any tax paid by Otter) in each business entity form; and (2) Ellie and Linda's basis in Otter Enterprises at the end of the year in each business entity form. Show your work and…

In Year 1 you invested $500,000 in exchange for a 40% partnership interest in ABC, LP. You later received a K-1 from ABC reporting $50,000 as your share of ABC’s Year 1 taxable income. During Year 1 you received a cash distribution from ABC of $75,000. You received a K-1 from ABC reporting $85,000 as your share of ABC’s Year 2 NOL. During Year 2 you received a cash distribution from ABC of $90,000. You received a K-1 from ABC reporting $110,000 as your share of ABC’s Year 3 taxable income. During Year 3 you received a cash distribution from ABC of $125,000. After all of the above, what is your adjusted tax basis in your partnership interest in ABC?   $________

At the beginning of the current year, Tymoe, an S corporation, was owned by two individual shareholders, Tyler and Moe. Tyler owns 52% and Moe owns 48%. During the year, Tymoe had ordinary income of $480,000, a net long-term capital gain of $45,000, and charitable contributions of $12,000. What is the amount of ordinary income, capital gain, and charitable contribution from Tymoe's activities that Tyler and Moe must each report in the current year?

Ramona and Hermione formed Wiley Corporation on January 2. Ramona contributed cash of $300,000 in return for 50 percent of the corporation's stock. Hermione contributed a building and land with the following fair market values and adjusted tax bases in return for 50 percent of the corporation's stock: FMV Building $112,500 Land 262,500 Total $375,000 Adjusted Tax Basis $30,000 120,000 $150,000 To equalize the exchange, Wiley Corporation paid Hermione $75,000 in addition to her stock. i. Assume Hermione's adjusted tax basis in the land was $375,000. What adjusted tax basis does Wiley Corporation take in the land and building received from Hermione seperately?

In the current year, Tom , Jay , and Dana form Ares Corporation. Tom contributes land (a capital asset) having a $62,500 FMV (fair market value) in exchange for 165 shares of stock. He purchased the land three years ago for $65,000. Jay contributes machinery (Sec. 1231 property purchased four years ago) having a $115,000 adjusted basis and a $37,500 FMV in exchange for 105 shares of Ares stock. Dana contributes services worth $25,000 in exchange for 60 shares of Ares stock.