S-Corporation Taxation Exercise - Chapter 6.xlsx - Problem...

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Problem 85 1 2 3 On March 31, 2016, Abigail lends $5,000 of her own money to Lafter. 4 5 Lafter has an accumulated adjustments account balance of $45,000 as of January 1, 201 6 Lafter also reported $12,000 of tax-exempt interest income. Abigail: Abigail, Bobby, and Claudia are equal owners in Lafter, an S corporation that was a C corporation job and is a passive owner. Consider the following information for 2016 As of January 1, 2016, Abigail, Bobby, and Claudia each have a basis in Lafter stock of $ shareholder. Bobby and Claudia also are passive owners in Aggressive LLC, which allocated business Lafter, for Claudia). Anticipating the need for basis to deduct a loss, on April 4, 2016, Bobby takes out a $10,0 as the sole collateral for his loan (nonrecourse). a. What amount of Lafter's 2016 business loss of $75,000 are Abigail, Bobby, and Claudi applicable) and each owner's at-risk amount with respect to the investment in Lafter at th
Description Debt basis Abigail stock basis January 1, 2016 $0 15000 10000 Share of tax-exempt income 4000 $0 ($25,000) December 31, 2016 $0 $4,000 Bobby suspends $6,000 of the loss at the risk level. Claudia: Description Debt basis Abigail stock basis January 1, 2016 $0 15000 Share of tax-exempt income 4000 $0 ($19,000) December 31, 2016 $0 $0 Claudia suspends $6,000 of the loss at the risk level and $5,000 of the loss as passive. 7 During 2017, Lafter made several changes to its business approach and reported $18,00 8 Lafter also reported a long-term capital gain of $24,000 in 2017. 9 Lafter made a cash distribution on July 1, 2017, of $20,000 to each shareholder. a. What amount of gain/income does each shareholder recognize from the cash distribu Capital contribution (from nonrecourse loan) Business loss clearing debt basis, and at risk hurdles Claudia is responsible for $25,000 of the $75,000 business loss. Claudia is allowed to de LLC was allocated. Business loss clearing debt basis, and at risk hurdles
Description Amount Notes
$45,000 2016 business loss ($75,000) ($30,000) 2017 business income $18,000 2017 long-term capital gain $24,000 $12,000 Distributions $60,000 $12,000 of distributions ar $0 Distribution can reduce AA Description Abigail Bobby Stock basis January 1, 2017 $0 $4,000 $6,000 $6,000 ($5,000) $8,000 $0 $9,000 $10,000 Return of capital portion of distribution $15,000 $15,000 ($6,000) ($5,000) Capital gain recognized on distribution $6,000 $0 Stock basis 12/31/2017 after distributions $0 ($5,000) Abigail Recognizes: Dividend Income $5,000.00 Long Term capital gain $6,000.00 Basis in Lafter Stock $0.00 Debt basis at year end $5,000.00 Bobby Recognizes: accumulated adjustment accounts balance 1/1/2016 accumulated adjustment accounts balance 1/1/2017 accumulated adjustment accounts balance 12/31/2017 before distributions accumulated adjustment accounts balance 12/31/2017 aferdistributions Share of 2013 business income ($18,000 total)

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