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Mirza_Assignment 6 - Ayesha Afzal Mirza Federal Income...

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Ayesha Afzal Mirza Federal Income Taxation FALB09 - Sec A Instructor: Joseph Poletti Assignment 6
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Chapter 12 4. Yes, Woodpecker can elect S corporation status. A small business corporation is limited to 100 shareholders. However, husband and wife are considered one shareholder. One hundred and one signatures must appear on the consent form. Both husband and wife must consent if they own their stock jointly. 7. a. d. + g. j. + m. + b. + e. h. k. + n. c. f. + i. l. o. 8. Lynch’s share of the net operating loss of $41,000 exceeds her stock basis of $29,000 by $12,000. Lynch may claim $29,000 of the NOL, which reduces the stock basis to zero. This excess loss of $12,000 may be applied to the adjusted basis of any corporate indebtedness to Lynch. Assuming there is no corporate indebtedness, any excess is suspended and carried over to succeeding tax years. 10. a. Book income $101,000 Add: Short-term capital loss 9,000 $110,000 Deduct: Dividends received $8,000 Tax-exempt interest 2,000 § 1231 gain 6,000 Passive income 3,000 (19,000) Ordinary income $ 91,000 b. $30,333.33 = $91,000 ÷ 3 14. a. Tobias recognizes $90,000 ordinary income. The corporation has a
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