chapter_12_solutions - 12-1Chapter 12 Solutions S...

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Unformatted text preview: 12-1Chapter 12 Solutions S Corporations (2011 edition) updated: March 29, 2011 25. Sales $141,000 Depreciation recapture income 12,000 $153,000 Cost of goods sold $45,000 Administrative expenses 15,000 Depreciation expense 21,000(81,000)Nonseparately computed income $ 72,000 p. 12-11 and Example 17 26. AAA Stock Basis AEP Beginning balance $2,000 $10,000 $6,000 Distribution ($6,000) (2,000)(2,000)(4,000)Balance $ 0 $ 8,000 $2,000 LTCG 2,000 2,000 0 Balance $2,000 $10,000 $2,000 Loss ($9,000) (9,000)(9,000)No effect Ending balance ($7,000)$ 1,000 $2,000 pp. 12-15, 12-16, 12-20 to 12-25, Example 23, and Exhibit 12.1 28. Book income $101,000 Add: Long-term capital loss 9,000 $110,000 Deduct: Dividends received $9,000 Tax-exempt interest 2,000 1231 gain 6,000 Short-term capital gain 3,000(20,000)Ordinary income $ 90,000 p. 12-11 and Example 17 31. A capital gain of $80,000 ($220,000 $140,000) is reported at the S corporation level, and each shareholder includes a flow-through of $20,000 ($80,000 4). Donalds basis in the S corporation becomes $90,000 ($290,000 $220,000 + $20,000). pp. 12-13, 12-19, 12-20, and Concept Summary 12.2 34. There will be a $30,000 negative balance in AAA, and AEP remains at $55,000. AAA AEP Beginning balance, 1-1-10 $100,000 $55,000 Less: Distributions (70,000) (0) Less: Loss (60,000)(0)Ending balance ($ 30,000)$55,000 In this case, AAA is adjusted first for the distributions and then for the loss. However, the negative balance must be restored to a positive balance before the shareholders may receive any distributions that will not be taxed as dividend income. pp. 12-15, 12-16, and Exhibit 12.1 12-235. a. Beginning stock basis $22,000 Add: Ordinary income $16,000 Dividend income 6,000 Tax-exempt interest 9,000 STCG 3,000 Section 1231 gain 3,50037,500 $59,500 Less: Charitable contributions $ 2,500 Political contributions 4,000 STCL 6,000 Distributions to Malcolm 9,500(22,000)Ending stock basis $37,500 p. 12-20 b. Beginning AAA $40,000 Add: Ordinary income $32,000 Dividends received 12,000 STCG 6,000 Section 1231 gain 7,00057,000 $97,000 Less: Charitable contributions $ 5,000 Political contributions 8,000 STCL 12,000 Distributions to other 50% shareholder(s) 9,500 Distributions to Malcolm 9,500(44,000)Ending AAA $53,000 pp. 12-15, 12-16, and Exhibit 12.1 36. On the distribution of the securities, there is a recognized gain of $200,000 to Money, Inc. ($1 On the distribution of the securities, there is a recognized gain of $200,000 to Money, Inc....
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chapter_12_solutions - 12-1Chapter 12 Solutions S...

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