Question
Rob and Wilma formed Apollo Corporation as an S corporation, with each shareholder contributing $7,000 in exchange for stock. In addition, Wilma loaned the corporation
Rob and Wilma formed Apollo Corporation as an S corporation, with each shareholder contributing $7,000 in exchange for stock. In addition, Wilma loaned the corporation $6,000, and the corporation borrowed another $12,000 from the bank. In the current year, the corporation incurred a $24,000 operating loss. In the next year, the corporation will earn $18,000 of operating income.
Requirements:
A. For the current year and next year, determine the pass-through items for each shareholder and each shareholder's stock basis at the end of each year. Also, determine Wilma's debt basis at the end of each year. | |
B. Same as Part a except the corporation also distributes $5,000 cash to each shareholder at the end of next year. | |
C. Assume the same facts as in Part b and that Apollo is a partnership instead of an S corporation. For the current year and next year, determine thepass-through items for each partner and each partner's basis in his or her partnership interest at the end of each year. |
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