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For each of the distributions described in items 1 through 5, compute the proper tax amount. What is the capital gain and/or ordinary income of
For each of the distributions described in items 1 through 5, compute the proper tax amount. What is the capital gain and/or ordinary income of each?
For each item, enter the appropriate amounts in the associated cells. If the amount is zero, enter a zero (0). Either column could have $0 for an answer. Enter all values as positive numbers.
1. Distribution of $15,000 cash to a shareholder if the accumulated adjustments account balance is $5,000 and the shareholders basis in his or her stock is $15,000. There are no Subchapter C earnings and profits. | ||
2. Distribution of $15,000 cash to shareholder if the accumulated adjustments account balance is $10,000. The shareholders basis in his or her stock is $15,000. The Subchapter C earnings and profits balance is $5,000. No election to apply distributions to earnings and profits first has been made. | ||
3. Distribution of a computer to a shareholder when its basis to the S Corporation was $15,000 and its fair market value was $10,000. The accumulated adjustments account balance is $10,000, and the shareholders basis in his or her stock is $10,000. There are no Subchapter C earnings and profits. | ||
4. Distribution of $15,000 cash to a shareholder when the accumulated adjustment account balance is $5,000 and the shareholders basis in his or her stock is $5,000. The shareholder has made a bona fide loan (the balance is $5,000) to the corporation. There are no Subchapter C earnings and profits. | ||
5. Distribution of $15,000 cash to a shareholder when the accumulated adjustments account balance is $5,000 and the shareholders basis in his or her stock is $5,000. There is $5,000 of Subchapter C earnings and profits. No election to apply distributions to earnings and profits first has been made. |
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