Reference no: EM132211433

Question - 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.

UpAHill Corporation (an S Corporation) Income Statement December 31, year 1 and year 2

Year 1 Year 2

Sales revenue $175,000 $310,000

Cost of goods sold (60,000) (85,000)

Salary to owners Jack and Jill (40,000) (50,000)

Employee wages (15,000) (20,000)

Depreciation expense (10,000) (15,000)

Miscellaneous expenses (7,500) (9,000)

Interest income 2,000 2,500

Dividend income 500 1,000

Overall net income $45,000 $134,500

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?