Problems 50 & 51 (Ch. 22)
Use the following information to complete problems 50 and 51:
50. (LO3)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?
b. Complete UpAHill’s Form 1120S, Schedule K, for year 1.
c. Complete Jill’s 1120S, Schedule K-1, for year 1.
51. (LO3, LO4)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?
Discussion Questions 1, 2, & 3 (Ch. 25)
1. (LO1)Identify the features common to the gift tax formula and the estate tax formula.
2. (LO1) Explain why Congress felt it necessary to enact a gift tax to complement the estate tax.
3. (LO1)Describe the unified credit and the purpose it serves in the gift and estate tax.
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