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 Year 1 Year 2 $ 175,000 $310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000)
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 Year 1 Year 2 $ 175,000 $310,000 (60,000) (85,000) (40,000) (50,000) (15,000) (20,000)
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 30P
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Question
Dd.55.
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
Year 1
$ 175,000
(60,000) (85,000)
(40,000)
(50,000)
(15,000)
(20,000)
(10,000)
(15,000)
Miscellaneous expenses
(7,500) (9,000)
Interest income (unrelated to business) 2,000
2,500
Qualified dividend income
1,000
Overall net income
$ 45,000
$134,500
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.
Sales revenue
Cost of goods sold
Salary to owners Jack and Jill
Employee wages
Depreciation expense
Year 2
$ 310,000
500
Ordinary income
Qualifed business income
Interest income
Dividend income
Allocated wages
Unadjusted basis of qualified property
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.
Answer is complete but not entirely correct.
Jack
Year 2
Year 1
31,875 S 96.250
33,375 $1.000,125
1,500 $
1.875
375 $ 750
OXS
Year 1
Year 2
$10.625 $ 32.750
$11.125s 33,375$
S 500 $ 025 $
$ 125 S 250 s
Os
0$
S
$ 25,000$ 25,000$ 75,000 $
0x
75.000
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