The company FPA has the following income, expense, and loss items for the current year:

Sales $850,000

Tax-exempt interest $40,000

Long-term capital gain $85,000

Short-term capital loss $35,000

Passive activity loss $20,000

Cost of goods sold $480,000

Depreciation $40,000

Section 179 expense $50,000

Other operating expenses $200,000

Net operating loss (from previous year) $24,000

Prepare calculations of taxable income for the following scenarios and indicate the tax form(s) to report the business activity:

• Sole proprietorship
• Partnership equally owned by Vinnie and Chandra
• Corporation owned by Kim
• S corporation owned equally by Henry, Iris, and Jasmine

For additional details, please refer to theModule Six Scenario Guidelines and Rubricdocument.

These are my calculations so far:

Sole Proprietorship Partnership Vinnie and Chandra

Revenues Vinnie's Revenue Chandra Revenue

Sales $850,000 Sales $425,000 Sales $425,000

COGS $(480,000) COGS $(240,000) COGS $(240,000)

Gross Profit $370,000 Gross Profit $185,000 Gross Profit $185,000

Net Capital Gains $50,000 Net Capital Gains $25,000 Net Capital Gains $25,000

Passive Activity Loss $(35,000) Gross Income $210,000 Gross Income $210,000

Gross Income $385,000 Other Opr. Exp. $(100,000) Other Opr. Exp. $(100,000)

Other Opr. Exp. $(200,000) Depreciation $(20,000) Depreciation $(20,000)

Depreciation $(40,000) Sec. 179 Exp. $(25,000) Sec. 179 Exp. $(25,000)

Sec. 179 Exp. $(50,000) Prev. Yr. Loss $(12,000) Prev. Yr. Loss $(12,000)

Prev. Yr. Loss $(24,000) Taxable Income $53,000 Taxable Income $53,000

Taxable Income $71,000

Kim's Corporation

Revenues

Sales $850,000

Less: COGS $(480,000)

Less: Depreciation $(40,000)

Less: Section 179 Expense $(50,000)

Less: Other Operation Expenses $(200,000)

Taxable Income $80,000

S Corporation Owned Equally by Henry, Iris, and Jasmine

Henry's Revenue Iris's Revenue Jasmine's Revenue

Sales $283,333 Sales $283,333 Sales $283,333

COGS $(160,000) COGS $(160,000) COGS $(160,000)

Depreciation $(13,333) Depreciation $(13,333) Depreciation $(13,333)

Other Opr. Exp. $(66,667) Other Opr. Exp. $(66,667) Other Opr. Exp. $(66,667)

Operating Income $43,333 Operating Income $43,333 Operating Income $43,333

Tax-Exempt Interest $13,333 Tax-Exempt Interest $13,333 Tax-Exempt Interest $13,333

Long-Term Captial Gains $28,333 Long-Term Captial Gains $28,333 Long-Term Captial Gains $28,333

Total Income $85,000 Total Income $85,000 Total Income $85,000

Less: Sec. 179 Exp. $(16,667) Less: Sec. 179 Exp. $(16,667) Less: Sec. 179 Exp. $(16,667)

Less: Short-term Captial $(11,667) Less: Short-term Captial Gains $(11,667) Less: Short-term Captial Gains $(11,667)

Less: Passive Activity Loss $(6,667) Less: Passive Activity Loss $(6,667) Less: Passive Activity Loss $(6,667)

Less: Prev. YR. Loss $(8,000) Less: Prev. YR. Loss $(8,000) Less: Prev. YR. Loss $(8,000)

Total Expense and Loss $(43,000) Total Expense and Loss $(43,000) Total Expense and Loss $(43,000)

Taxable Income $42,000 Taxable Income $42,000 Taxable Income $42,000