ain Content Bob and Joan incorporate their partnership and elect to be taxed as an S Corporation. At the time of incorporation, the partnership owneu contributed securities with a basis of $10,000 and a fair market value of $15,000. Two years later the S Corporation sold the securities for $18,000. Which of the following statements about the tax effects of these facts is false? The total stock basis of the shareholders is increased by $8,000 as a result of the securities sale. The shareholders are taxed on $8,000 of income as a result of the sale The S corporation is subject to an entity level built-in gains tax on $5,000 as a result of this sale none of the above
ain Content Bob and Joan incorporate their partnership and elect to be taxed as an S Corporation. At the time of incorporation, the partnership owneu contributed securities with a basis of $10,000 and a fair market value of $15,000. Two years later the S Corporation sold the securities for $18,000. Which of the following statements about the tax effects of these facts is false? The total stock basis of the shareholders is increased by $8,000 as a result of the securities sale. The shareholders are taxed on $8,000 of income as a result of the sale The S corporation is subject to an entity level built-in gains tax on $5,000 as a result of this sale none of the above
Chapter15: Taxing Business Income
Section: Chapter Questions
Problem 2DQ
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Transcribed Image Text:Main Content
Bob and Joan incorporate their partnership and elect to be taxed as an S Corporation. At the time of incorporation, the partnership
owneu contributed securities with a basis of $10,000 and a fair market value of $15,000. Two years later the S Corporation sold the
securities for $18,000.
Which of the following statements about the tax effects of these facts is false?
The total stock basis of the shareholders is increased by $8,000 as a result of the securities sale.
The shareholders are taxed on $8,000 of income as a result of the sale
The S corporation is subject to an entity level built-in gains tax on $5,000 as a result of this sale
none of the above
Transcribed Image Text:Tara is the sole shareholder of an S Corporation. Tara's salary and bonus from the S Corporation is $110,000 and the ordinary income
of the S Corporation after deducting all expenses (including Tara's compensation) is $30,000.
How much of Tara's income from the S corporation is subject to social security and Medicare taxes?
DO NOT USE COMMAS OR DOLLAR SIGNS IN YOUR ANSWER!!
Answer: 140000
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT