Explore BrainMass

S Corporation Accounting Problems

1. During 2009, Shirley Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. On December 31, 2008, her stock basis was $4,000. The corporation earned $11,000 ordinaty income during the year. It has no accumulated E &P. which statement is correct?

a. Nutt recognizes a $1,000 LTCG
b. Nutt's stockbasis will be $2,000
c. Nutt's ordinary income is $15,000
d. Nutt's return of capital is $11,000
e. None of the above

2.Fred is the sole shareholder of an S corporation in Fort Deposit, Alabama. At a time when his stock basis is $10,000, the corporation distributes appreciated propertywoth $100,000 (basis of $10,000). There is no built in gain. Fred's taxable gain is:

a. $0
b. $10,000
c. $90,000
d. $100,000
e. None of the above

3. You are given the following facts about a 50% owner of an S corporation, and you are asked to prepare her ending stock basis.

Increase in AAA $32,000
Increase in OAA 6,300
Payroll tax penalty 2,140
Ending PTI 6,125
Beginning stock basis 39,800
Tax exempt interest income 4,800
Insurance Premiums paid (nondeductible) 2,700
Stock purchases 22,000

a. $80,950
b. $85,750
c. $100,000
d. $106,225
e. Some other amount

4. On January 2, 2008, David loans his S corporation $10,000, and by the end of 2008 David's stock basis is zero and the basis in his note has been reduced to $8,000. During 2009, the company's operating income is $10,000. The company also makes distibutions to David of $11,000. Which statement is correct?

a. $1,000 LTCG
b. $3,000 LTCG
c. $11,000 LTCG
d. Loan basis is $10,000
e. None of the above statements are correct.

5. Randall owns 800 shares in Fabirication, Inc. an S corporation in Moss Hill, Texas. In 2009, his basis in his stock is $30,000, before the adjustment for this year's losses. During 2009, Randall's share of the corporation's ordinary loss is $20,000 and his share of its captial loss is $15,000. How much can Randall deduct due to these losses?

a. None
b. $15,000 ordinary loss; $10,000 capital loss
c. $17,143 ordinary loss; $12,857 captial loss
d. $20,000 ordinary loss; $15,000 capital loss
e. some other amounts

6. Claude Bergeron sold 1,000 ashares of Ditta, Inc, an S corporation lcoated in Concord, North Carolina, for $9,000. He had owned the stock for three years and had a stock basis of $107,000 in the shares. Assuming that Claude is single and he is the original owner of these 1244 stock shares, calculate the appropriate tax treatement of any gain or loss.

a. No gain or loss
b. $50,000 ordinary deduction; $48,ooo LTCL
c. $50,000 ordinary deduction; $48,000 LTCL
d. $98,000 long=term capital loss
e. None of the above.

7. During 2009, an S corporation in Flint, Michigan, has a recognized built-in loss of $10,000. It also holds an unexpired NOL form a C corporation year of $8,000, and it generates taxable income of $65,000. The built-in gain tax is, if any:

a. $0
b. $19,950
c. $22,750
d. $57,000
e. None of the above

Solution Summary

This solution provides assistance with the S Corporation accounting problems attached.