a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Jack Jill Year 1 Year 2 Year 1 Year 2 Ordinary income Dividend income Qualified business income Allocated wages Unadjusted basis of qualified property
a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years. Jack Jill Year 1 Year 2 Year 1 Year 2 Ordinary income Dividend income Qualified business income Allocated wages Unadjusted basis of qualified property
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 33P
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Question
Transcribed Image Text:Jack and Jill are owners of UpAHill, an S Corporation. They own 25 and 75 percent, respectively.
UpAHill Corporation (an S Corporation)
Income Statement
December 31, Year 1 and Year 2
Year 1
Year 2
$ 175,000
( 60,000)
( 40,000)
(15,000)
(10,000)
(7,500)
2,000
$ 310,000
(85,000)
( 50,000)
(20,000)
(15,000)
(9,000)
2,500
Sales revenue
Cost of goods sold
Salary to owners Jack and Jill
Employee wages
Depreciation expense
Miscellaneous expenses
Interest income (related to business)
Qualified dividend income
500
1,000
$ 134,500
Overall net income
$ 45,000
a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information
above? Assume that UpAHill Corporation has $100,000 of qualified property (unadjusted basis) in both years.
Jack
Jill
Year 1
Year 2
Year 1
Year 2
Ordinary income
Dividend income
Qualified business income
Allocated wages
Unadjusted basis of qualified property
Expert Solution
Step 1
Solution:-
Given,
Jack and Jill are owners of Up A Hill, an S corporation.
Jack has = 25%
Jill = 75%
| Jack | Jill | |||
| Year-1 | Year-2 | Year-1 | Year-2 | |
| Ordinary Income | $11,125 | $33,375 | $33,375 | $100,125 |
| Qualified Business income | $11,125 | $33,375 | $33,375 | $100,125 |
| Dividend income | $125 | $250 | $375 | $750 |
| Allocated wages | $3,750 | $5,000 | $11,250 | $15,000 |
| Unadjusted basis of qualified property | $25,000 | $25,000 | $75,000 | $75,000 |
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