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  This year, Justin B.’s share of S corporation income includes  $6,200 of interest income, $8,300 of dividend income, and $51,000 of net income from the corporation’s professional service business activity.  Assume that Justin B. materially participates in the S corporation. How much of his S corporation income is potentially subject to the net investment income tax? $6,200 of interest income, $8,300 of dividend income, 14,500  S corporation income is potentially subject to the net investment income tax b.  Assume that Justin B. does not materially participate in the S corporation. How much of his S corporation income is potentially subject to the net investment income tax? $51,000 of net income from the corporation’s professional service business activity.
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  Alabama Corporation, an S corporation, liquidates this year by distributing a parcel of land to its sole shareholder, Mark Ingram. The fair market value of the parcel is $62,750, and its tax basis is $39,000. Mark’s basis in his stock is $31,750. a.  What amount of gain or loss, if any, does Alabama Corporation recognize on the distribution? Fair market value of the parcel is $62,750                                  -  tax basis is $39,000 Gain recognized                            $23,750 b.  How much gain must Mark recognize (if any) as a result of the distribution, and what is his basis in the land? Market recognized Gain on distribution  1st gain   $62,750 -  $39,000 =  $23,750 2nd   stock is $31,750 +    $23,750 = 55,500 $62,750 -  55,500 = 7,250 Total gain 1...
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  At the end of the year, before distributions, Bombay (an S corporation) has an  accumulated adjustments account balance of $17,800 and  accumulated E&P of $23,500 from a previous year as a C corporation.  During the year, Nicolette (a 40% shareholder) received a $23,500 distribution  (the remaining shareholders received $35,250 in distributions). (Assume her stock basis is $47,000 after considering her share of Bombay’s income for the year but before considering the effects of the distribution.)   Required: What are the amount and character of income or gain Nicolette must recognize from the distribution? What is her basis in her Bombay stock at the end of the year? Descrip tion Amount Calculation NOTE (a) Total Distribution          23,500 (b) Bombay Accumulated Adjusted Account beginning balance          17,800 (c) Distribution from Accumulated Adjusted Account   ...
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Stock basis

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When Pet Emporium terminated its S election on August 31, 2019, Chandra had a stock basis and an at-risk amount of $0. Chandra also had a suspended loss from Pet Emporium of $9,900. What amount of the suspended loss is Chandra allowed to deduct, and what is her basis in her Pet Emporium stock at the end of the post-termination transition period under the following alternative scenarios?  (assume Pet Emporium files for an extension to file its tax returns)?   a. Chandra makes capital contributions of  $8,350 on August 30, 2020, and  $5,080 on September 14, 2020.   Chandra is allowed to create a stock basis or do absorb the suspended loss until the end of the Post-termination transition period. PTTP.  This ends on the later of   1 year after the last corporate C Corp day - Aug 30 the due date for filing the return including extensions- September 15 ...
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S corporation Termination test

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Assume the following S corporations, gross receipts, passive investment income, and corporate E&P.  All became S corporations at the beginning of year 1. Will any of these corporations have their S election terminated due to excessive passive income? If so, in what year?  Corp A.   Gross Passive Investment Passive income rate  Corporate Earnings Year Receipts Income and Profits 1 1,357,208 268,750 19.80% 323,550 2 1,233,389 118,750 9.63% 323,550 3 1,146,234 318,750 27.81% 237,500 4 1,351,719 368,750 27.28% 104,500 5 1,504,240 418,750 27.84% 0 Corp A exceeds the 25% benchmark for 3 consecutive years, but on year 5 does not report earnings/profits so will not be terminated   Corp B   Gross Passive Investment Passive income rate  Corporate Earnings Year Receipts Income and Profits 1 1,434,500 265,000 18.47% 140,589 2 703,380 218,000 30.99% 103,000 3 853,050 199,000 23.33% 103,000 4 834,950 228,000 27.31% 82,250 5 1,004,285 275,390 27.42% 82,250 Corp B...
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