The profit and loss statement of Kitsch Ltd., an S corporation, shows $175,000 book income. Kitsch is owned equally by four shareholders. From supplemental data, you obtain the following information about items that are included in book income. Selling expenses Tax-exempt interest income Dividends received. § 1231 gain Depreciation recapture income Net income from passive real estate rentals Long-term capital loss. Salary paid to owners (each) Cost of goods sold The entity's nonseparately stated computed ($35,000) 5,250 15,750 12,250 17,500 8,750 a. Compute Kitsch's nonseparately stated income or loss for the tax year. (10,500) (21,000) (157,500) Is the income taxable to him this year? is $ b. What would be the share of this year's nonseparately stated income or loss items for James Billings, one of the Kitsch shareholders? c. What is James Billings' share of tax-exempt interest income, if any? Round your answer to the nearest dollar.
The profit and loss statement of Kitsch Ltd., an S corporation, shows $175,000 book income. Kitsch is owned equally by four shareholders. From supplemental data, you obtain the following information about items that are included in book income. Selling expenses Tax-exempt interest income Dividends received. § 1231 gain Depreciation recapture income Net income from passive real estate rentals Long-term capital loss. Salary paid to owners (each) Cost of goods sold The entity's nonseparately stated computed ($35,000) 5,250 15,750 12,250 17,500 8,750 a. Compute Kitsch's nonseparately stated income or loss for the tax year. (10,500) (21,000) (157,500) Is the income taxable to him this year? is $ b. What would be the share of this year's nonseparately stated income or loss items for James Billings, one of the Kitsch shareholders? c. What is James Billings' share of tax-exempt interest income, if any? Round your answer to the nearest dollar.
Chapter17: Corporations: Introduction And Operating Rules
Section: Chapter Questions
Problem 47P
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T6.
Transcribed Image Text:The profit and loss statement of Kitsch Ltd., an S corporation, shows $175,000 book income. Kitsch is owned equally by four shareholders.
From supplemental data, you obtain the following information about items that are included in book income.
Selling expenses
Tax-exempt interest income
Dividends received
§ 1231 gain
Depreciation recapture income
Net income from passive real estate rentals
Long-term capital loss
Salary paid to owners (each)
Cost of goods sold
($35,000)
5,250
15,750
12,250
17,500
8,750
(10,500)
(21,000)
(157,500)
a. Compute Kitsch's nonseparately stated income or loss for the tax year.
The entity's nonseparately stated computed
is $
b. What would be the share of this year's nonseparately stated income or loss items for James Billings, one of the Kitsch shareholders?
Is the income taxable to him this year?
c. What is James Billings' share of tax-exempt interest income, if any? Round your answer to the nearest dollar.
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