Reference no: EM133152098

Question - SS Corporation is an S Corporation. SS Corporation's financial records show the following:

Gross receipts from sales $670,000

Cost of goods sold (460,000)

Operating expenses (96,800)

Business meals (6,000)

Capital loss on sale of stock (13,000)

Charitable contribution (1,500)

Distribution (dividend) to shareholders (10,000)

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

Required -

A. What is SS Corporation's ordinary business income or loss for the year?

B. What is Mr. S's share of S Corporation income and separately stated items? What is included on his tax return as a result of being a shareholder in SS Corporation?

C. If Mr. S's adjusted basis in his S corporation stock was $20,000 at the beginning of the year, and the liabilities of the corporation decreased by $50,000 during the year, what is his adjusted basis in his S corporation stock at the end of the year?

D. How much self-employment tax will Mr. S have to assuming he has no other source of income or loss?