C10-Chp-00-Tst-2-Sol-2010-Nite

C10-Chp-00-Tst-2-Sol-2010-Nite - 5. Distributions-1 No. An...

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5. Distributions-1 87068f47819928ab829ae726f913a1eed4191f39.xls Page 1 of 5 No. An Code 1 B 301 2 B Davis Corporation Sales $700,000 Cost of sales $400,000 Municipal bond interest 12,000 Compensation 100,000 Meals and entertainment (Gross) 20,000 Payroll taxes, and Misc. Expense 150,000 Subtotal 670,000 712,000 Net Income before taxes 42,000 Total $712,000 $712,000 Net income before taxes $42,000 Less municipal bond interest (12,000) Add disallowed entertainment 10,000 Taxable income 40,000 Income tax rate 15% Federal income tax due $6,000 312 Taxable income $40,000 1.312-6(b) Add municipal bond interest 12,000 Subtract disallowed deductions (10,000) Subtract federal income tax (6,000) 100,000 312 $136,000 3 E Accumulated earnings and profits balance at 1-1-2010 $20,000 Taxable income for year $60,000 Federal income taxes for the year ($10,000) 1.312-6(b) Municipal bond interest earned $2,500 52,500 Subtotal 72,500 Cash distribution to sole individual shareholder 30,000 Accumulated earnings and profits balance at 1-1-2011 $42,500 Income Tax Computation First $50,000 15% $7,500 Next 10,000 25% 2,500 $60,000 $10,000
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5. Distributions-2 87068f47819928ab829ae726f913a1eed4191f39.xls Page 2 of 5 No.Ans Code 4 D 311 Non-liquidating distribution of appreciated property. Corporation recognized gain as if property sold for its FMV.
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This note was uploaded on 03/09/2012 for the course ACCT 6120 taught by Professor Godfrey,h during the Spring '08 term at UNC Charlotte.

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C10-Chp-00-Tst-2-Sol-2010-Nite - 5. Distributions-1 No. An...

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