Sunita is a one-third owner in Bikes-R-Us, an S corporation that experienced a $50,700 loss this year (year 1). Assume her stock basis is $12,280 at the beginning of the year and that at the beginning of year 1 Sunita loaned Bikes-R-Us $3,570. In year 2, Bikes-R-Us reported ordinary income of $13,140. Note: Leave no answer blank. Enter zero if applicable. Required: What amount is Sunita allowed to deduct in year 1? What are her stock and debt bases in the corporation at the end of year 1? What are her stock and debt bases in the corporation at the end of year 2?

Jayhawk Company reports current E&P of $310,000 and accumulated E&P of negative $282,500. Jayhawk distributed $505,000 to its sole shareholder, Christine Rock, on the last day of the year. Christine s tax basis in her Jayhawk stock is $128,750. What is Jayhawk s balance in accumulated E&P on the first day of next year?

On January 1, Year 1, Carrot, an individual, paid $17,500 for 5 percent of the stock in Root Corp., an S corporation. In November, he loaned $8,900 to Root Corp. in return for a promissory note. Root Corp. generated a $860,000 operating loss in Year 1. Required: a. How much of his share of the loss can Carrot deduct on his Year 1 return? b. Compute Carrot's basis in his Root Corp. stock and his Root Corp. note at the end of Year 1. Complete this question by entering your answers in the tabs below. Required A Required B How much of his share of the loss can Carrot deduct on his Year 1 return? Deduction

Jayhawk Company reports current E&P of $340,000 and a deficit in accumulated E&P at the beginning of the year of ($322,500). Jayhawk distributed $405,000 to its sole shareholder, Christine Rock, on the last day of the year. Christine's tax basis in her Jayhawk stock before the distribution is $57,000. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a. How much of the $405,000 distribution is treated as a dividend to Christine? Dividend

On January 1, Year 1, Carrot, an individual, paid $24,000 for 5 percent of the stock in Root Corp., an S corporation. In November, he loaned $12,500 to Root Corp. in return for a promissory note. Root Corp. generated a $896,000 operating loss in Year 1. Required: How much of his share of the loss can Carrot deduct on his Year 1 return? Compute Carrot’s basis in his Root Corp. stock and his Root Corp. note at the end of Year 1.

Jayhawk Company reports current E&P of $452,500 and a deficit in accumulated E&P at the beginning of the year of ($412,500). Jayhawk distributed $597,500 to its sole shareholder, Christine Rock, on the last day of the year. Christine’s tax basis in her Jayhawk stock before the distribution is $98,500. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a. How much of the $597,500 distribution is treated as a dividend to Christine? b. What is Christine’s tax basis in her Jayhawk stock after the distribution?

Tiny and Tim each owns half of the 100 outstanding shares of Flower Corporation. This year, Flower reported taxable income of $6,000. In addition, Flower received $20,000 of life insurance proceeds due to the death of an employee (Flower paid $500 in life insurance premiums this year). Flower had $5,000 of accumulated E&P at the beginning of the year. (Leave no answer blank. Enter zero if applicable.) a. What is Flower’s current E&P? b. Flower distributed $6,000 on February 15 and $30,000 on August 1. What total amount of dividends will Tiny and Tim report? (Do not round intermediate calculations.) c. What amount of capital gain (if any) would Tiny and Tim report on the distributions in part (b) if their stock bases are $2,000 and $10,000, respectively? (Do not round intermediate calculations.)

Indigo, Inc., a calendar year S corporation, has no AEP. During the year, Amari, an individual shareholder of the corporation, receives a cash distribution of $18,500 from Indigo. Amari's basis in stock is $15,000. In this case: a. Amari receives $3,500 tax-free. b. Amari has ordinary income of $15,000. c. Amari has a negative stock basis of $3,500. d. Amari receives $15,000 tax-free. e. Amari has a capital gain of $18,500.

Taylor Corporation is a calendar year taxpayer. Devon owns all of its stock. Her basis for the stock is $5,000. On April 1 of the current (non-leap) year Taylor distributes $54,000 to Devon. Read the requirement. a. Current earnings and profits (E&P) of $20,000; accumulated E&P of $18,000. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Complete all input fields. For zero amounts, enter a 0. Use parentheses or a minus sign for losses and E&P deficits.) Situation a. Distribution Dividend income Remaining distribution Return of capital Capital gain (loss) Carryforward accumulated E&P Requirement Determine the tax consequences of the cash distribution in each of the following independent situations: a. Current E&P of $20,000; accumulated E&P of $18,000. b. Current E&P of $26,000; accumulated E&P deficit of $(16,000). C. Current E&P deficit of $(70,000); accumulated E&P of $50,000. d. Current E&P deficit of $(16,000); accumulated…

Ms. Reid borrowed $50000 from a broker to purchase Lero Inc. common stock. This year, she paid $3900 interest on the debt. Compute her itemized deduction for this interest in each of the following cases.a. The Lero stock paid a $1100 dividend this year, and Ms. Reid had on other investment income. b. Ms. Reid's only investment income was $690 interest on a certificate of deposit. c. Ms. Reid's only investment income was a $4900 ordinary dividend from her investment in Koal Mutual Fund.