Question
Q 1. During 2017, DL, Inc., an S corporation for the whole year, earned the following income and loss items: ordinary income of $175,000; short-term
Q 1.
During 2017, DL, Inc., an S corporation for the whole year, earned the following income and loss items: ordinary income of $175,000; short-term capital gain of $94,000; long-term capital loss of ($91,000); tax-exempt income of $22,000; and made a charitable contribution of $18,000. At the end of the year, Diego Luis owned 50% of the stock of DL, Inc. Diego bought his shares from another shareholder on October 1, 2017. How much of each item will Diego include in his 2017 personal income tax return related to the items from DL, Inc.?
| Ordinary Income | ST Capital Gain | LT Capital Loss | Tax-exempt income | Charitable contribution |
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a. | 87,500 | 47,000 | (45,500) | 11,000 | 9,000 |
b. | 43,750 | 23,500 | (22,750) | 5,500 | 4,500 |
c. | 21,875 | 11,750 | (11,375) | 2,750 | 2,250 |
d. | 21,875 | 375 | 0 | 5,500 | 4,500 |
Q 2.
Transferor | Item | FMV | Basis |
Mikey | Building | 500,000 | 240,000 |
Mikey | Office Equipment | 25,000 | 12,000 |
Pam | Office Equipment | 75,000 | 40,000 |
Pam | Advertising Services | 40,000 | 0 |
Ryan | Patent | 100,000 | 0 |
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- What will be the basis for each of the shareholders in their stock of MPR, Inc.? The answers are in order of Mikey, Pam and Ryan.
- 525,000; 75,000 and 100,000
- 525,000; 115,000 and 100,000
- 252,000; 80,000 and 100,000
- 252,000; 80,000; and 0
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