Question 1 Dean and Jerry each own 50% of Pardners, Inc. an S corporation. At the start of the year, it has $5,000 of AEP and $8,000 in AAA. Pardners’ taxable income is $10,000. It distributes $6,000 to each shareholder midyear and distributes another $4,000 to each at the end of the year. How is Dean taxed on his distributions? Answer a. $500 dividend income. b. $1,000 dividend income. c. $1,500 dividend income. d. $2,000 dividend income. e. $3,000 dividend income. 4 points Question 2 Dunkenfield, Inc. is an S Corporation. Bill is the sole shareholder.
Question 1 Dean and Jerry each own 50% of Pardners, Inc. an S corporation. At the start of the year, it has $5,000 of AEP and $8,000 in AAA. Pardners’ taxable income is $10,000. It distributes $6,000 to each shareholder midyear and distributes another $4,000 to each at the end of the year. How is Dean taxed on his distributions? Answer ?a.?$500 dividend income.???b.?$1,000 dividend income.???c.?$1,500 dividend income.???d.?$2,000 dividend income.???e.?$3,000 dividend income.??4 points Question 2 Dunkenfield, Inc. is an S Corporation. Bill is the sole shareholder. Dunkenfield distributes equipment to Bill (FMV: $95,000; basis: $20,000). There are no other activities during the year. Bill has a stock basis of $35,000 before the distribution. Bill reports a taxable gain for the year of: Answer ?a.?$0.???b.?$60,000.???c.?$75,000.???d.?$95,000.???e.?None of the above.??4 points Question 3 Babaloo, Inc. is a calendar year S Corporation. Desi had a beginning stock basis of $40,000. He owns 60% of the stock. Based upon the following, what is his ending stock basis? New non recourse loan?$25,000??Increase in AAA?20,000??Distribution to Desi?(6,000)??Operating loss?(5,000)??Tax exempt interest income?6,000??Increase in OAA?7,500??Purchases of additional stock?10,000?????Answer ?a.?$72,500.???b.?$60,500.???c.?$91,100.???d.?$76,100.??4 points Question 4 Lucy is a 40% owner of Babaloo, Inc. At the start of the year, she has a zero stock basis. Last year, she loaned Babaloo $10,000. That year’s operating loss reduced her basis in the loan to $7,000. During the year, Babaloo has operating income of $22,500 and distributes $11,000 to Lucy. Lucy reports a(n): Answer ?a.?$1,000 LTCG.???b.?$11,000 LTCG.???c.?$2,000 LTCG.???d.?Loan basis of $5,000.??4 points Question 5 Al is the sole shareholder of Bundiful, Inc., an S Corporation. At the start of the year, his stock basis is $25,000. During the year, Bundiful has an operating loss of $35,000 and a capital…
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