a. Compute Cougar’s book income or loss. b. Compute Johnny’s ending stock basis. c. Calculate Cougar’s ending AAA balance.
Cougar, Inc., is a calendar year S corporation. Cougar’s Form 1120S shows nonseparately stated ordinary income of $80,000 for the year. Johnny owns 40% of the Cougar stock throughout the year. The following information is obtained from the corporate records.
|
Tax-exempt interest income |
$ 3,000 |
|
Salary paid to Johnny |
(52,000) |
|
Charitable contributions |
(6,000) |
|
Dividends received from a non-U.S. corporation |
5,000 |
|
Short-term capital loss |
(6,000) |
|
|
11,000 |
|
Refund of prior state income taxes |
5,000 |
|
Cost of goods sold |
(72,000) |
|
Long-term capital loss |
(7,000) |
|
Administrative expenses |
(18,000) |
|
Long-term |
14,000 |
|
Selling expenses |
(11,000) |
|
Johnny’s beginning stock basis |
$ 32,000 |
|
Johnny’s additional stock purchases |
9,000 |
|
Beginning AAA |
31,000 |
|
Johnny’s loan to corporation |
20,000 |
a. Compute Cougar’s book income or loss.
b. Compute Johnny’s ending stock basis.
c. Calculate Cougar’s ending AAA balance.
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