Reference no: EM132606301

Questions -

QUESTION 1: Mary, Inc. a calendar year S corporation, incurred the following items:

Sales 150,000

Tax exempt interest income 8,000

Depreciation recapture income 14,500

Long-term capital gain 30,000

Cost of goods sold 72,000

Administrative Expense 18,000

Charitable Contributions 8,400

MACRS depreciation expense 7,200

a. Calculate Mary Inc.'s no separately computed income or loss.

b. What would be Pam's share of long-term capital gain if she is a 25% owner of Mary, Inc.?

QUESTION 2: Landon, Inc., a calendar year S corporation had a balance in AAA of $185,000 and AEP of $110,000 at the end of the previous year. During 2019, Landon, Inc., distributes $140,000 to its shareholders, while sustaining an ordinary loss of $120,000. Calculate the balance in Landon Inc.'s AAA and AEP accounts at the end of the year.

QUESTION 3: At the beginning of the tax year, Liz holds a $10,000 stock basis as the sole shareholder of Randy, Inc., an S corporation. During the year, Randy, Inc. reports the following.

Taxable operating income 40,000

Net short-term capital loss 14,000

Cash distributions to Liz 57,000

Determine Liz's stock basis at the end of the year and the treatment of her cash distribution.