a.) Ordinary Income: $108,100/2 = $54,050/shareholder

Separately Stated Items (per shareholder):

Dividends 5,000

Tax-exempt income 1,500

1231 Gain 6,000

LTCG 4,000

LTCL 3,500

STCL 3,000

Stock Invest. 3,200

Tax-exempt bonds 900

Charitabe Cont. 1,000

b.) ?

c.) ?

Mike and Nancy are equal shareholders in the MN Corporation, an S corporation. The corporation, Mike, and Nancy are calendar year taxpayers. The corporation has been an S during its entire existence. The shareholders have no loans to the corporation. The corporation incurred the following items in the current year: Sales $300,000 COGS 140,000 Dividends 10,000 Tax-exempt interest income 3,000 $1245 gain 22,000 $1231 gain 12,000 LTCG 8,000 LTCL 7,000 STCL 6,000 Depreciation 18,000 Salary to Nancy 20,000 Meals and entertainment 7,800 Interest Expense on Loans allocable to: Business debt 32,000 Stock investments 6,400 Tax exempt bonds 1,800 Principal payment on business loan 9,000 Charitable contributions 2,000 Distributions to shareholders 30,000 ($15,000 each) a. Compute the corporation's ordinary income and separately stated items. b. What are Mike's and Nancy's shares of the items in part a? c. Compute Mike's and Nancy's bases assuming their beginning balances are $100,000 each. Mike and Nancy are equal shareholders in the MN Corporation, an S corporation. The corporation, Mike, and Nancy are calendar year taxpayers. The corporation has been an S during its entire existence. The shareholders have no loans to the corporation. The corporation incurred the following items in the current year: Sales $300,000 COGS 140,000 Dividends 10,000 Tax-exempt interest income 3,000 $1245 gain 22,000 $1231 gain 12,000 LTCG 8,000 LTCL 7,000 STCL 6,000 Depreciation 18,000 Salary to Nancy 20,000 Meals and entertainment 7,800 Interest Expense on Loans allocable to: Business debt 32,000 Stock investments 6,400 Tax exempt bonds 1,800 Principal payment on business loan 9,000 Charitable contributions 2,000 Distributions to shareholders 30,000 ($15,000 each) a. Compute the corporation's ordinary income and separately stated items. b. What are Mike's and Nancy's shares of the items in part a? c. Compute Mike's and Nancy's bases assuming their beginning balances are $100,000 each