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 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 Overall net income Year 1 $ 175,000 (60,000) (40,000) (15,000) (10,000) (7,500) 2,000 500 $ 45,000 Year 2 $ 310,000 (85,000) (50,000) (20,000) (15,000) (9,000) 2,500 1,000 $ 134,500
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 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 Overall net income Year 1 $ 175,000 (60,000) (40,000) (15,000) (10,000) (7,500) 2,000 500 $ 45,000 Year 2 $ 310,000 (85,000) (50,000) (20,000) (15,000) (9,000) 2,500 1,000 $ 134,500
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 33P
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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
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
Overall net income
Ordinary income
Allocated wages
Unadjusted basis of qualified property
Year 1
$ 175,000
(60,000)
(40,000)
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.
Year 1
(15,000)
(10,000)
(7,500)
2,000
500
$ 45,000
Year 2
$ 310,000
(85,000)
(50,000)
(20,000)
(15,000)
(9,000)
2,500
1,000
$ 134,500
Jack
Year 2
Year 1
Jill
Year 2
b. Complete UpAHill's Form 1120-S, Schedule
K, for year 1. Complete Jill's Form 1120-S
Schedule K for year 1.
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