Ch9Exam3 - Ch9 #1 Jon is the sole owner of All-Star...

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Ch9 #1 Jon is the sole owner of All-Star Enterprises. The company earned net operating income of $83,000 during 2009 and had a LTCL of $8,000. He withdrew $43,500 of the profit from All-Star during the year. How should he report this information if All- Star is: a-A proprietorship? b-A C Corp? c-A S Corp? a- 83,000.00$ on Jon's Schedule C. (8,000.00) on Jon's Schedule D If he has no ther capital transactions then he will be allowed to deduct 3,000 on his FO 1040-- the remainder will be carried over. The $83,000 will also be subject to SE Tax. b- $83,000 TI for All-Star. LTCL can not be deducted in 2009. Jon will report dividend income of $43,500 on his 1040 as qualified dividends. c. $83,000 on Jon's schedule E ($8,000) on Schedule D If he has no ther capital transactions then he will be allowed to deduct 3,000 on his FORM 1040-- the remainder will be carried over. Withdrawal will not be taxed-- S-Corp ordinary income not subject to SE Tax. However, IRS would insist that Jon be compensated (with a salary) for services he provided to the company. #2 Altec Company had at $350,000 net profit from operations in 2009 and paid Shelly, its sole shareholder, a dividend of $231,000 ($350,000 – $119,000 corporate tax). She has a large amount of income from other sources and is in the 35% marginal tax bracket. Would her tax situation be better or worse if Altec were a proprietorship and she withdrew $231,000 from the business during the year? IF CORPORATION
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This note was uploaded on 12/07/2010 for the course ACG 3361, 4401 taught by Professor Goldwater,canada,judd,byrd,theniel during the Spring '10 term at University of Central Florida.

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Ch9Exam3 - Ch9 #1 Jon is the sole owner of All-Star...

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