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APA
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Accounting, Finance, SPSS
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English (U.S.)
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Jack and Jill Are Owners of Upahill an s Corporation: Accounting and Taxation Problems

Coursework Instructions:

Support your answers with calculations, as needed. •Problems 1. Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent, respectively. a. What amount of ordinary income and separately stated items are allocated to them for years 1 and 2 based on the information above? b. Complete UpAHill’s Form 1120S, Schedule K, for year 1. c. Complete Jill’s 1120S, Schedule K-1, for year 1. 2. 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. 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? •Discussion Questions 3. Identify the features common to the gift tax formula and the estate tax formula. 4. Explain why Congress felt it necessary to enact a gift tax to complement the estate tax. 5. Describe the unified credit and the purpose it serves in the gift and estate tax.

Coursework Sample Content Preview:

Accounting and taxation Problems/Discussions
Name
Course
Instructor
Date

UpAHill Corporation (an S CorporationIncome Statement December 31, Year 1 and Year 2Year 1Year 2Sales Revenue$175,000 $310,000 Cost of Goods sold60,00085,000Salary to owners Jack & Jill40,00050,000Employee Wages15,00020,000Depreciation Expense10,00015,000Miscellaneous Expenses7,5009,000Interest income2,0002,500Dividend income5001,000Overall net income$45,000 $134,500 
a. Ordinary income and separately stated items allocated in years 1 and 2
Ordinary income is equal total net income –interest income and dividend income
Year 1=$45, 000-(2,000+500) = 42,500
Year2=$134,500- (2500+1,000) = 131,000
Since Jack owns 25 % in year 1
The ordinary income is 0.25* $ 42,500= $ 10,625
Interest income= 0.25* 2000= 500
Dividend income=0.25*500=125
Jill owns 75 % and
Ordinary income share is 0.75* $42,500= 31,875 Interest income=0.75 * 2000=1,500
Dividend income = 0.75*500=375.
Year 2
Ordinary income is 0.25* $ 131,000=32,750
Interest income= 0.25* 2500=625
Dividend income=0.25*1000=250
Jill owns 75 % and
Ordinary income share is 0.75* $131,000= 98,250 Interest income=0.75 * 2500=1,875
Dividend income = 0.75*1000=750
b. UpAHill Schedule K, year 1.
Schedule K Shareholder's Pro Rata Share ItemsTotal Amount1. Ordinary business income/ loss42,5002. Net rental real estate income/ loss3a. Other Gross rental income/ lossb. Expenses from other rental activitiesc. Other rental income4. Interest income2,0005. Dividends: ordinary: a Ordinary dividends500 b: Qualified dividends5b. 5006 Royalties7. Net short-term capital gain/ loss8a. Net Long term capital gain/loss b. Collectible (28%) gain/loss9. Net section 123 gain/ loss10. Other income/ loss
c. Jill’s 1120S, Schedule K-1, for year 1 [Attached separately]
Tax bases in their shares at the end of year
Jack
JackOriginal bases$24,000 Shar...
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