95000 85000 10000 10000 35 3500 46 2009

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Unformatted text preview: at Evan's gross income is calculated as 40% of the distribution for the year ($100,000 x 40% = $40,000) less the basis of $2,000 as of the beginning of the year ($40,000 - $2,000 = $38,000). Choice "b" is incorrect. This answer option incorrectly assumes that Evan's gross income is calculated as 40% of the distribution for the year ($100,000 x 40% = $40,000). Choice "d" is incorrect. This answer option incorrectly assumes that Evan's gross income is 1 - 40%, or 60%, of the corporation's operating income for the year ($200,000 x 60% = $120,000), less the basis of $2,000 as of the beginning of the year ($120,000 - $2,000 = $118,000). CPA-05547 Type1 M/C A-D Corr Ans: C PM#19 R 3-02 94. CPA-05547 Released 2007 Page 47 Magic Corp., a regular C corporation, elected S corporation status at the beginning of the current calendar year. It had an asset with a basis of $40,000 and a fair market value (FMV) of $85,000 on January 1. The asset was sold during the year for $95,000. M...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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