chapter -12 solution

# chapter -12 solution - 12-1Chapter 12 Solutions S...

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Unformatted text preview: 12-1Chapter 12 Solutions S Corporations (2011 edition) updated: November 1, 2010 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). Donald’s 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...
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chapter -12 solution - 12-1Chapter 12 Solutions S...

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