Assume the following year 2 income statement for Johnstone Corporation, which was a C corporation in year 1 and elected to be taxed as an S corporation beginning in year 2. Johnstone's earnings and profits at the end of year 1 were $11,820. Marcus is Johnstone's sole shareholder, and he has a stock basis of $47,000 at the end of year 1. Johnstone Corporation Income Statement December 31, Year 2 Sales revenue Cost of goods sold Salary to owners Employee wages Depreciation expense Miscellaneous expenses Interest income. Overall net income. Year 2 (S Corporation) $ 178,000 (42,000) (67,000) (57,500) (11,000) (4,700) 12,880 $ 8,680 What is Johnstone's accumulated adjustments account at the end of year 2, and what amount of dividend income does Marcus recognize on the year 2 distribution in each of the following alternative scenarios? Note: Leave no answer blank. Enter zero if applicable. Johnstone distributed $27,400 to Marcus in year 2. Accumulated adjustments account $ Dividend income 0

Assume the following year 2 income statement for Johnstone Corporation, which was a C corporation in year 1 and elected to be taxed as an S corporation beginning in year 2. Johnstone's earnings and profits at the end of year 1 were $11,820. Marcus is Johnstone's sole shareholder, and he has a stock basis of $47,000 at the end of year 1. Johnstone Corporation Income Statement December 31, Year 2 Sales revenue Cost of goods sold Salary to owners Employee wages Depreciation expense Miscellaneous expenses Interest income. Overall net income. Year 2 (S Corporation) $ 178,000 (42,000) (67,000) (57,500) (11,000) (4,700) 12,880 $ 8,680 What is Johnstone's accumulated adjustments account at the end of year 2, and what amount of dividend income does Marcus recognize on the year 2 distribution in each of the following alternative scenarios? Note: Leave no answer blank. Enter zero if applicable. Johnstone distributed $27,400 to Marcus in year 2. Accumulated adjustments account $ Dividend income 0

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Description: [The following information applies to the questions displayed below.]Assume the following year 2 income statement for Johnstone Corporation, which was a C corporation in year 1 andelected to be taxed as an S corporation beginning in year 2. Johnston

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 16P

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