Exercise 22-19 (Algorithmic) (LO. 7) Vogel, Inc., an S corporation for five years, distributes a tract of land held as an investment to Jamari, its majority shareholder. The land was purchased for $71,800 ten years ago and is currently worth $179,500. If an amount is zero, enter, "0". a. As a result of the distribution, what is Vogel's recognized capital gain? How much is reported as a distribution to shareholders? Vogel recognizes a capital gain of $ a proportionate share of it passes through to the shareholders land. b. What is the net effect of the distribution on Vogel's AAA? There is a net decrease ✓of $ Vogel recognizes a loss $ would take a $ 107,700 ✓ which is reported on Schedule K, and ✓. Jamari would take a $ 71,800✔ on Vogel's AAA. c. Assume instead that the land had been purchased for $179,500 and was currently worth $71,800. How much would Vogel recognize as a loss? What would be the net effect on Vogel's AAA? What would be Jamari's basis in the land? Feedback 0✔and the net effect on Vogel's AAA is a decrease 71,800✔ basis in the land. 179,500✔ basis in the of $ 71,800 X. Jamari
Exercise 22-19 (Algorithmic) (LO. 7) Vogel, Inc., an S corporation for five years, distributes a tract of land held as an investment to Jamari, its majority shareholder. The land was purchased for $71,800 ten years ago and is currently worth $179,500. If an amount is zero, enter, "0". a. As a result of the distribution, what is Vogel's recognized capital gain? How much is reported as a distribution to shareholders? Vogel recognizes a capital gain of $ a proportionate share of it passes through to the shareholders land. b. What is the net effect of the distribution on Vogel's AAA? There is a net decrease ✓of $ Vogel recognizes a loss $ would take a $ 107,700 ✓ which is reported on Schedule K, and ✓. Jamari would take a $ 71,800✔ on Vogel's AAA. c. Assume instead that the land had been purchased for $179,500 and was currently worth $71,800. How much would Vogel recognize as a loss? What would be the net effect on Vogel's AAA? What would be Jamari's basis in the land? Feedback 0✔and the net effect on Vogel's AAA is a decrease 71,800✔ basis in the land. 179,500✔ basis in the of $ 71,800 X. Jamari
Chapter11: Investor Losses
Section: Chapter Questions
Problem 64P
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Why is this not 71,800? What's the real answer?
Transcribed Image Text:Exercise 22-19 (Algorithmic) (LO. 7)
Vogel, Inc., an S corporation for five years, distributes a tract of land held as an investment to Jamari, its majority shareholder. The land
was purchased for $71,800 ten years ago and is currently worth $179,500.
If an amount is zero, enter, "0".
a. As a result of the distribution, what is Vogel's recognized capital gain? How much is reported as a distribution to shareholders?
Vogel recognizes a capital gain ✔ of $
a proportionate share of it passes through to the shareholders
land.
b. What is the net effect of the distribution on Vogel's AAA?
There is a net decrease
✔ of $
Vogel recognizes a loss $
would take a $
107,700 ✓ which is reported on Schedule K, and
✔. Jamari would take a $
Feedback
71,800✔ on Vogel's AAA.
c. Assume instead that the land had been purchased for $179,500 and was currently worth $71,800. How much would Vogel recognize as
a loss? What would be the net effect on Vogel's AAA? What would be Jamari's basis in the land?
o✓ and the net effect on Vogel's AAA is a decrease
71,800 ✓basis in the land.
179,500 ✓basis in the
✓of $
71,800 X . Jamari
✓ Check My Work
When an S corporation distributes property (instead of cash) to a shareholder, the effect on AAA and shareholder's basis must be determined.
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