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) 2,000 500 2,500 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.
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) 2,000 500 2,500 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.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter5: Business Deductions
Section: Chapter Questions
Problem 1BCRQ
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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
$ 175,000
(60,000)
Year 2
$ 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
Interest income
Allocated wages
Unadjusted basis of qualified property
Answer is complete but not entirely correct.
Jack
Jill
Year 1
Year 2
Year 1
Year 2
$ 45,000
$134,500 $
45,000
$134,500 ×
$
500
$1,000
$
500
$ 1,000
$ 44,500
$133,500
$
44,500
$ 133,500
$
25
$
25
$
75
$
75☑
$ 11,125
$ 33,375
$
33,375 (
$ 100,125
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