Check by work Valence Corporation’s Form 1120S shows ordinary income of $88,000 for the year. Daniel owns 40% of the Valence stock throughout the year. The following information is obtained from the corporate records. problem info Salary paid to Daniel $ (40,000.00) Tax-exempt interest income $ 5,000.00 Charitable contributions $ (6,000.00) Dividends received from a non-US Corp $ 5,000.00 Long-ter capital loss $ (6,000.00) Depreciation Recapture income $ 11,000.00 Refund of prior-year state income taxes $ 5,000.00 Cost of goods sold $ (80,000.00) Short-term capital loss $ (7,000.00) Administraive expenses $ (18,000.00) Short-term capital gain $ 14,000.00 Selling Expenses $ (11,000.00) Daniel's beginning stock basis $ 32,000.00 Daniel's additional stock purchases $ 9,000.00 Beginning AAA $ 45,000.00 Daniels loan to corporation $ 20,000.00 Compute Valenc's book income or loss Valence Corporaton Ordinary Income $ 88,000.00 Add Dividends rcvd non-US corp $ 5,000.00 Add Tax-exempt interest income $ 5,000.00 Add Refund of prior yr state income taxes $ 5,000.00 Add Short-term Cap Gain $ 14,000.00 Subtotal $ 117,000.00 Less Charitable contributions $ (6,000.00) Less Short-term Cap Loss $ (7,000.00) Less Long-term Cap Loss $ (6,000.00) Book Income $ 98,000.00
Check by work Valence Corporation’s Form 1120S shows ordinary income of $88,000 for the year. Daniel owns 40% of the Valence stock throughout the year. The following information is obtained from the corporate records. problem info Salary paid to Daniel $ (40,000.00) Tax-exempt interest income $ 5,000.00 Charitable contributions $ (6,000.00) Dividends received from a non-US Corp $ 5,000.00 Long-ter capital loss $ (6,000.00) Depreciation Recapture income $ 11,000.00 Refund of prior-year state income taxes $ 5,000.00 Cost of goods sold $ (80,000.00) Short-term capital loss $ (7,000.00) Administraive expenses $ (18,000.00) Short-term capital gain $ 14,000.00 Selling Expenses $ (11,000.00) Daniel's beginning stock basis $ 32,000.00 Daniel's additional stock purchases $ 9,000.00 Beginning AAA $ 45,000.00 Daniels loan to corporation $ 20,000.00 Compute Valenc's book income or loss Valence Corporaton Ordinary Income $ 88,000.00 Add Dividends rcvd non-US corp $ 5,000.00 Add Tax-exempt interest income $ 5,000.00 Add Refund of prior yr state income taxes $ 5,000.00 Add Short-term Cap Gain $ 14,000.00 Subtotal $ 117,000.00 Less Charitable contributions $ (6,000.00) Less Short-term Cap Loss $ (7,000.00) Less Long-term Cap Loss $ (6,000.00) Book Income $ 98,000.00
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter15: S Corporations
Section: Chapter Questions
Problem 23P
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Question
Check by work
Valence Corporation’s Form 1120S shows ordinary income of $88,000 for the year. Daniel owns 40% of the Valence stock throughout the year. The following information is obtained from the corporate records.
| problem info | |
| Salary paid to Daniel | $ (40,000.00) |
| Tax-exempt interest income | $ 5,000.00 |
| Charitable contributions | $ (6,000.00) |
| Dividends received from a non-US Corp | $ 5,000.00 |
| Long-ter capital loss | $ (6,000.00) |
| $ 11,000.00 | |
| Refund of prior-year state income taxes | $ 5,000.00 |
| Cost of goods sold | $ (80,000.00) |
| Short-term capital loss | $ (7,000.00) |
| Administraive expenses | $ (18,000.00) |
| Short-term |
$ 14,000.00 |
| Selling Expenses | $ (11,000.00) |
| Daniel's beginning stock basis | $ 32,000.00 |
| Daniel's additional stock purchases | $ 9,000.00 |
| Beginning AAA | $ 45,000.00 |
| Daniels loan to corporation | $ 20,000.00 |
| Compute Valenc's book income or loss | |
| Valence Corporaton | |
| Ordinary Income | $ 88,000.00 |
| Add Dividends rcvd non-US corp | $ 5,000.00 |
| Add Tax-exempt interest income | $ 5,000.00 |
| Add Refund of prior yr state income taxes | $ 5,000.00 |
| Add Short-term Cap Gain | $ 14,000.00 |
| Subtotal | $ 117,000.00 |
| Less Charitable contributions | $ (6,000.00) |
| Less Short-term Cap Loss | $ (7,000.00) |
| Less Long-term Cap Loss | $ (6,000.00) |
| Book Income | $ 98,000.00 |
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Capital gain is the income earned on the sale of capital asset.
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