Ss corporation is an s corporation. ss has always been an s

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SS Corporation is an S Corporation. SS has always been an S corporation and has no C Corporation E & P. SS Corporation's financial records for 2013 show the following:

Gross receipts from sales $668,000

Qualified dividend income received 2,000

Tax-exempt interest income 1,000

Cost of goods sold (460,000)

Operating expenses (96,800)

Business meals and entertainment (6,240)

Section 1231 loss on sale of equipment (13,500)

Charitable contribution (1,500)

Distribution (legal dividend) to shareholders (10,000)

SS Corporation has an $180,000 balance in its accumulated adjustment account (AAA) on January 1, 2013.

Mr. S owns 10 percent of the stock of SS Corporation. During the year he received a $1,000 distribution (legal dividend) from the corporation.

Required:

A. Compute SS Corporation's ordinary business income.

B. Compute Mr. S's share of S Corporation's ordinary business income and separately stated items.

C. If Mr. S's adjusted basis in his S corporation stock was $20,000 at the beginning of the year, compute his adjusted basis at the end of the year. Assume that SS Corporation's debt did not change during the year.

D. How would your basis computation change if SS Corporation's debt at the end of the year was $50,000 more than its debt at the beginning of the year?

E. Compute the ending balance (12/31/2013) in SS Corporation's accumulated adjustments account (AAA).

Reference no: EM13531374

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