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Comparative Entities: Amber has a 2 0 % ownership interest in an entity for which she initially contributed $ 2 5 0 , 0 0

Comparative Entities:
Amber has a 20% ownership interest in an entity for which she initially contributed $250,000. She
is one of the original owners of the business. During the life of the business the following have
occurred:
Cumulative losses of $600,000 during the last three years (her share would be $120,000)
Profits of $280,000 in the current year (her share would be $56,000)
The entity borrowed $150,000 of recourse debt
Distributions to owners of $150,000(her share would be $30,000) in the current year
Determine the tax consequences if the entity is a partnership:
a. How much loss can she deduct over the three years?
b How much income will be taxable to her in the current year?
c What is the ending balance of her partnership interest (show computations)?
Determine the tax consequences if the entity is a S Corporation:
a. How much loss can she deduct over the three years?
b How much income will be taxable to her in the current year?
c What is the ending balance of her stockholder interest (show computations)?
Determine the tax consequences if the entity is a regular Corporation:
a. How much loss can she deduct over the three years?
b How much income will be taxable to her in the current year?
c What is the ending balance of her stockholder interest (show computations)?
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