S Corporations:
The Madison Restaurant was formed a S corporation at the end of last year. Bob Buron,
owns 35% of the stock, manages the restaurant. Ray Huges owns the remaining 65%
of the stock. Mr. Buron contributed $30,000 of cash and services worth $5,000
to start the S corporation. Mr. Huges contributed property with a cost to him of
$50,000 and a fair market value of $65,000 to also start the S Corp.
Below are pertinent facts for the current year:
Cost of Goods Sold			425,000		1. Calculate (and show computations)
Charitable Contributions			10,000		of the S Corporation's ordinary taxable income:
Depreciation			30,000
Sales			1,000,000		Answer:
Long Term Capital Gain			7,000			Ordinary Income
Repairs and Maintenance			12,000
Distribution to Mr. Buron			70,000		Sales	$1,000,000
Section 1231 gain			8,500
Dividends received			1,500
Distribution to Mr. Huges			50,000
Salary to Mr. Buron			70,000
Municipal Bond Interest Received			1,000
Short Term Capital Loss			6,000
Other Salaries			215,000
2. List which items are separately stated for the S Corporation.
3. What is Mr. Burton's stock basis at the end of the year?									Again show computations!
4. What is Mr. Huges' stock basis at the end of the year?									Again show computations!
			Answer:
				Buron		Huges
			Beg.
5. If the S Corporation has an ordinary loss for the next year of $250,000,
how much can Mr. Buron deduct?