equired information [The following information applies to the questions displayed below.] Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $14,000 from Falcons Corporation. \table[[\table[[Falcons Corporation (an S Corporati],[Income Statement],[December 31 , Year 1 and Year 2]],Year 1,Year 2],[\table[[Sales revenue],[Cost of goods sold],[Salary to owners Julio and Milania],[Employee wages],[Depreciation expense],[Section 179 expense],[Interest income (related to business income)],[Municipal bond income],[Government fines]],\table[[305,000],[(43,000)
equired information [The following information applies to the questions displayed below.] Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $14,000 from Falcons Corporation. \table[[\table[[Falcons Corporation (an S Corporati],[Income Statement],[December 31 , Year 1 and Year 2]],Year 1,Year 2],[\table[[Sales revenue],[Cost of goods sold],[Salary to owners Julio and Milania],[Employee wages],[Depreciation expense],[Section 179 expense],[Interest income (related to business income)],[Municipal bond income],[Government fines]],\table[[305,000],[(43,000)
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
Problem 28P
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Question
Required information [The following information applies to the questions displayed below.] Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In year 1, Julio and Milania each received distributions of $14,000 from Falcons Corporation. \table[[\table[[Falcons Corporation (an S Corporati],[Income Statement],[December 31 , Year 1 and Year 2]],Year 1,Year 2],[\table[[Sales revenue],[Cost of goods sold],[Salary to owners Julio and Milania],[Employee wages],[Depreciation expense],[Section 179 expense],[Interest income (related to business income)],[Municipal bond income],[Government fines]],\table[[305,000],[(43,000)
![Required information
[The following information applies to the questions displayed below.]
Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In
year 1, Julio and Milania each received distributions of $14,000 from Falcons Corporation.
Falcons Corporation (an S Corporation)
Income Statement
December 31, Year 1 and Year 2
Sales revenue
Year 1
$ 305,000
Year 2
Cost of goods sold
Salary to owners Julio and Milania
Employee wages
(43,000)
$ 435,000
(63,000)
(40,000)
(80,000)
(25,000)
50,000)
Depreciation expense
Section 179 expense
Interest income (related to business income)
Municipal bond income
(15,000)
(30,000)
(30,000)
(50,000)
10,000
Government fines
Overall net income
Distributions
1,300
0
$ 163,300
18,500
3,600
(2,000)
$ 182,100
$ 28,000
$ 50,000
a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above?
Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis).
Ordinary Income
Distributions
Municipal bond income
Qualified business income
Section 179 expense
Allocated wages
Unadjusted basis of qualified property
Amount
Allocated to Allocated to
Julio
Milania](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F663a3fa5-93ac-43ef-8a53-f46a2c346ac2%2F7ad89ade-8110-427c-94b5-676bcfe966fa%2Fd1m2zdr_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Julio and Milania are owners of Falcons Corporation, an S corporation. Each owns 50 percent of Falcons Corporation. In
year 1, Julio and Milania each received distributions of $14,000 from Falcons Corporation.
Falcons Corporation (an S Corporation)
Income Statement
December 31, Year 1 and Year 2
Sales revenue
Year 1
$ 305,000
Year 2
Cost of goods sold
Salary to owners Julio and Milania
Employee wages
(43,000)
$ 435,000
(63,000)
(40,000)
(80,000)
(25,000)
50,000)
Depreciation expense
Section 179 expense
Interest income (related to business income)
Municipal bond income
(15,000)
(30,000)
(30,000)
(50,000)
10,000
Government fines
Overall net income
Distributions
1,300
0
$ 163,300
18,500
3,600
(2,000)
$ 182,100
$ 28,000
$ 50,000
a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above?
Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis).
Ordinary Income
Distributions
Municipal bond income
Qualified business income
Section 179 expense
Allocated wages
Unadjusted basis of qualified property
Amount
Allocated to Allocated to
Julio
Milania
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