course: taxation business pass thru entities

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es at the Assume Jack and Jill, 25 and 75 percent shareholders, respectively, in UpAHill Corporation, have tax bases in their shar 5 eginning of year 1 of $24,000 and $56,000, respectively. Also assume no distributions were made. Given the income statement above, what are their tax bases in their shares at the end of year 1? UpAB1 111 Corporation (an S Corporation) Income Statement December 31, year 1 and year 2 Year 2 $175,000 $310,000 (60,000) (85,000) Year Sales revenue Cost of goods sold salary to owners Jack and Ji11 Employee wages (40,000) (50,000) Miscellaneous expenses Interest income(related to business) Qualified dividend income Overall net income (15,000) (20,000) 10,000) (15,000) (7,500)(9,000) 2,500 ,000 s 45,000 $134,500 2,000 500 Falcons Corporation (an s Corporation) Income Statement December 31, Year 1 and Year 2 Year 1 Year 2 300,000 $430,000 Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Interest income (related to business) Municipal bond income Government fines Overall net income (40,000) (60,000) (40,000) (80,000) (25,000) (50,000) (20,000) (40,000) (30,000) (50,000) 12,000 22,500 4,000 (2,000) 1,500 $158,500 $174,500 Distributions 30,000 50,000 a. What amount of ordinary income and separately stated items are allocated to them for year 1 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis). Allocated to Allocated to Amount Julio Milani Ordinary Income Section 179 expense Interest income Municipal bond income Distributions 30,000 15,000 15,000 1,500 750 30,00015,000$ 15,000 750 Julio and Milania are owners of Falcons Corporation, an S corporation. They each own 50 percent of Falcons Corporation. In year 2, Julio and Milania each received distributions of $25,000 from Falcons Corporation. Falcons Corporation (an S Corporation) Income Statement December 31, Year 1 and Year 2 Year 1 Year 2 Sales revenue Cost of goods sold Salary to owners Julio and Milania Employee wages Depreciation expense Section 179 expense Interest income (related to $300,000 $430,000 (40,000) (60,000) 40,000) (80,000) (25,000) (50,000) (20,000) (40,000) (30,000) (50,000) 22,500 1,500 4,000 $158,500 $174,500 30,000 50,000 12,000 business) Municipal bond income Government fines Overall net income 0(2,000) Distributions a. What amount of ordinary income and separately stated items are allocated to them for year 2 based on the information above? Assume that Falcons Corporation has $200,000 of qualified property (unadjusted basis). Julio Ordinary Income