Accounting
5 PROBLEM
28. Y, an S corporation formed at the beginning of the year, has the following information in its first year:
Gross Income from services $100,000
Net short-term capital loss (2,200)
Salary paid to F (10,000)
Medical insurance premium for F (300)
Other operating expenses (54,000)
Cash distributions to F 5,000
F, a 50 percent owner of Y, is single and has no other tax information. F's A.G.I. is
a. $21,900
b. $26,750
c. $26,900
d. $35,700
e. Some other amount, which is $_________
b. ($100,000 – $10,000 – $54,000 = $36,000 – 300) × 50% = $17,850 + $10,300 salary – $1,100 STCL – $300 Medical Insurance allowable = $26,750). The salary is deductible by the S corporation and includible by F. Half the capital loss flows through to F and reduces her A.G.I. The medical insurance premium is deductible by the corporation and is treated as salary to the shareholder. (See Example 16 and pp. 23-12 and 23-13.)
29. An S corporation has the following information for its taxable year:
Net ordinary income before the items below are considered $65,000
Salary to Z (18,000)
Rental income 22,000
Rental expenses (29,000)
Net income $40,000
Z, a 50 percent owner, performs services for the business. Z's self-employment income from the corporation, which is subject to self-employment tax, is
a. $0
b. $18,000
c. $41,500
d. $23,500
e. $38,000
29. a. Shareholders do not have self-employment income from profits or employment by S (or C) corporation. Their salaries are subject to FICA. (See p. 23-13.)
31. Z owns five of an S corporation's 100 shares of common stock outstanding. After holding the stock 73 days during the taxable year, Z sells all five shares. S corporate records for the year show taxable income to be $200,000. If no special election is made, Z's includible share of taxable income from the S corporation is
a. $2,000
b. $10,000
c. Not able to be determined from the information provided in the problem because the interim closing of
28. Y, an S corporation formed at the beginning of the year, has the following information in its first year:
Gross Income from services $100,000
Net short-term capital loss (2,200)
Salary paid to F (10,000)
Medical insurance premium for F (300)
Other operating expenses (54,000)
Cash distributions to F 5,000
F, a 50 percent owner of Y, is single and has no other tax information. F's A.G.I. is
a. $21,900
b. $26,750
c. $26,900
d. $35,700
e. Some other amount, which is $_________
b. ($100,000 – $10,000 – $54,000 = $36,000 – 300) × 50% = $17,850 + $10,300 salary – $1,100 STCL – $300 Medical Insurance allowable = $26,750). The salary is deductible by the S corporation and includible by F. Half the capital loss flows through to F and reduces her A.G.I. The medical insurance premium is deductible by the corporation and is treated as salary to the shareholder. (See Example 16 and pp. 23-12 and 23-13.)
29. An S corporation has the following information for its taxable year:
Net ordinary income before the items below are considered $65,000
Salary to Z (18,000)
Rental income 22,000
Rental expenses (29,000)
Net income $40,000
Z, a 50 percent owner, performs services for the business. Z's self-employment income from the corporation, which is subject to self-employment tax, is
a. $0
b. $18,000
c. $41,500
d. $23,500
e. $38,000
29. a. Shareholders do not have self-employment income from profits or employment by S (or C) corporation. Their salaries are subject to FICA. (See p. 23-13.)
31. Z owns five of an S corporation's 100 shares of common stock outstanding. After holding the stock 73 days during the taxable year, Z sells all five shares. S corporate records for the year show taxable income to be $200,000. If no special election is made, Z's includible share of taxable income from the S corporation is
a. $2,000
b. $10,000
c. Not able to be determined from the information provided in the problem because the interim closing of