Tax Week 6 Analysis

1035 words - 5 pages

Team C Homework 6
Comprehensive Problems:
50. Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent, respectively.

a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above?

Year 1 Year 2
Ordinary Income
Jack (25%) $10,625 $32,750
Jill (75%) $31,875 $98,250
Ordinary income= Overall net income – dividends – interest income
Jack (45,000 – 500 – 2000 * 25%, yr1/ 134,500 – 1,000 – 2,500 * 25%, yr2)
Jill (45,000 – 500 – ...view middle of the document...

Royalties 0
7. Net short-term capital gain (loss) 0
8a. Net long-term capital gain (loss) 0
b. Colectibles (28%)gain (loss) 0
c.Unrecaptured section 1250 gain 0
9. Net section 1231 gain (loss) 0
10. Other income (loss) 0

c. Complete Jill’s 1120S, Schedule K-1, for year 1.

Jill Year 1 1120S
1. Ordinary business income (loss) 31,875
2. Net rental real estate income (loss) 0
3a. Other Gross rental income (loss) 0
b. Expenses from other rental activities 0
c. Other net rental income (loss) 3b-3a 0
4. Interest income 1,500
5. Dividends: a Ordinary dividends 375
bQualified dividends 375
6. Royalties 0
7. Net short-term capital gain (loss) 0
8a. Net long-term capital gain (loss) 0
b. Colectibles (28%)gain (loss) 0
c.Unrecaptured section 1250 gain 0
9. Net section 1231 gain (loss) 0
10. Other income (loss) 0

51. Assume Jack and Jill, 25 and 75 percent shareholders 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 above, what are their tax bases in their shares at the end of year 1?
Description | Jack | Jill |
Initial Tax Basis | $ 24,000 | $ 56,000 |
Ordinary Business Income | 10,625 | 31,875 |
Interest Income | 500 | 1,500 |
Dividends | 125 | 375 |
Tax Basis in Stock at end of Year 1 | $ 35,250 | $ 89,750 |

Discuss Questions:
1. Identify the features common to the gift tax formula and the estate tax formula.
These two tax formulas have five common features as below:
a....

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