XYZ CORP, AN S CORP WITH ONE SHAREHOLDER, SAM:

YEAR 1:

TAX-EXEMPT INCOME $5,000

ORDINARY INCOME 30,000

YEAR 2:

ORDINARY LOSS ($40,000)

CASH DISTRIBUTIONS 15,000

BEGINNING OF YEAR 1:

XYZ HAS AAA AND OAA OF $0, AND ACCUMULATED E&P OF $6,000.

SAM HAS STOCK BASIS OF $10,000 AND DEBT BASIS OF $12,000 (ON LOAN TO XYZ).

QUESTIONS:

A. WHAT IS SAMS REPORTABLE ITEMS FROM XYZ FOR YEARS 1 AND 2.

(FILL-IN) Items reported by the shareholder SAM:

Year 1:

Ordinary income $

Tax-exempt income

Year 2:

Ordinary loss allowed

B. WHAT ARE BALANCES IN XYZ ACCOUNTS AND SAMS STOCK AND DEBT BASES AT END OF EACH YEAR.

(use accounts discussed rows/columns balances)

C. WHAT IF DISTRIBUTION IN YEAR 2 IS $35,000 INSTEAD OF $15,000?

(FILL-IN) Items reported by the shareholder:

Year 1:

Year 2:

Dividend income $

Ordinary loss allowed

Remaining loss carries over

(and - use accounts discussed rows/columns balances)