Gte paid 15000 of rent for a building and equipment

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GTE paid $15,000 of rent for a building and equipment, $20,000 for advertising, $14,000 in interest expense, $4,000 for utilities, and $2,000 for supplies. 5. GTE contributed $5,000 to charity. 6. GTE received a $1,000 qualified dividend from a great stock investment (it owned 2 percent of the corporation distributing the dividend), and it recognized $1,500 in short-term capital gain when it sold some of the stock. 7. On December 1, 2018, GTE distributed $20,000 to James and $20,000 to Paul. 8. GTE has qualified property of $300,000 (unadjusted basis). a-1. Assume James and Paul formed GTE as an S corporation. Complete GTE’s Form 1120S, page 1; Form 1120 S, Schedule K. a-2. Assume James and Paul formed GTE as an S corporation. Complete Paul’s Form 1120S Schedule K-1. a-3. Assume James and Paul formed GTE as an S corporation. 1. i. Compute the tax basis of Paul’s stock in GTE at the end of 2018. 2. ii. What amount of Paul’s income from GTE is subject to FICA or self-employment taxes. 3. iii. What amount of income, including its character, will Paul recognize on the $20,000 distribution he receives on December 1? 4. iv. What amount of tax does GTE pay on the $1,000 qualified dividend it received?

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