Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 2, Julio and Milania each received distributions of $25,000 from Falcons Corporation. Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Year 1 Year 2 Sales revenue $ 300,000 $ 430,000 Cost of goods sold (40,000) (60,000) Salary to owners Julio and Milania (40,000) (80,000) Employee wages (25,000) (50,000) Depreciation expense (20,000) (40,000) Section 179 expense (30,000) (50,000) Interest income (related to business income) 12,000 22,500 Municipal bond income 1,500 4,000 Government fines 0 (2,000) Overall net income $ 158,500 $ 174,500 Distributions $ 30,000 $ 50,000 a. What amount of ordinary income and separately stated items are allocated to them for year 2 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis
Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 2, Julio and Milania each received distributions of $25,000 from Falcons Corporation. Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Year 1 Year 2 Sales revenue $ 300,000 $ 430,000 Cost of goods sold (40,000) (60,000) Salary to owners Julio and Milania (40,000) (80,000) Employee wages (25,000) (50,000) Depreciation expense (20,000) (40,000) Section 179 expense (30,000) (50,000) Interest income (related to business income) 12,000 22,500 Municipal bond income 1,500 4,000 Government fines 0 (2,000) Overall net income $ 158,500 $ 174,500 Distributions $ 30,000 $ 50,000 a. What amount of ordinary income and separately stated items are allocated to them for year 2 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis
Chapter10: Deductions And Losses: Certain Itemized Deductions
Section: Chapter Questions
Problem 31P
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Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 2, Julio and Milania each received distributions of $25,000 from Falcons Corporation.
| Falcons Corporation (an S Corporation) | ||
| Income Statement | ||
| December 31, Year 1 and Year 2 | ||
| Year 1 | Year 2 | |
|---|---|---|
| Sales revenue | $ 300,000 | $ 430,000 |
| Cost of goods sold | (40,000) | (60,000) |
| Salary to owners Julio and Milania | (40,000) | (80,000) |
| Employee wages | (25,000) | (50,000) |
| (20,000) | (40,000) | |
| Section 179 expense | (30,000) | (50,000) |
| Interest income (related to business income) | 12,000 | 22,500 |
| Municipal bond income | 1,500 | 4,000 |
| Government fines | 0 | (2,000) |
| Overall net income | $ 158,500 | $ 174,500 |
| Distributions | $ 30,000 | $ 50,000 |
a. What amount of ordinary income and separately stated items are allocated to them for year 2 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis).
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT