Use the following information to complete the problems

UpAHill Corporation (an S corporation) Income Statement December 31, year 1 and year 2
	Year 1	Year 2
Sales revenue	$175,000	$310,000
Cost of goods sold	(60,000)	(85,000)
Salary to owners Jack and Jill	(40,000)	(50,000)
Employee wages	(15,000)	(20,000)
Depreciation expense	(10,000)	(15,000)
Miscellaneous expenses	(7,500)	(9,000)
Interest income	2,000	2,500
Qualified dividend Income	500	1,000
Overall net income	$45,000	$134,500

Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent,

respectively.

a. What amount of ordinary income and separately stated items are allocated to them

for years 1 and 2 based on the information above? Assume that UpAHill Corporation

has $100,000 of qualified property (unadjusted basis) in both years.

b. Complete UpAHills Form 1120S, Schedule K for year 1.

c. Complete Jills 1120S, Schedule K-1 for year 1.

Assume Jack and Jill, 25 and 75 percent shareholders in UpAHill corporation have tax bases in their shares at the beginning of year 1 of $24,000 and $56,000, respectively. Also assume no distributions were made. Given the income statement above, what are their tax bases in their shares at the end of year 1?