Five multi-choice questions concern shareholder basis in an S-corporation.

1. Keeping track of shareholder basis in S-Corporation stock is the responsibility of a. the corporation b. the shareholder 2. Knowing the basis in the stock is important a. for limiting the amount of loss a shareholder can deduct b. for limiting the amount of gain a shareholder must report 3. A non-taxable distribution to a shareholder a. increases basis in the stock b. decreases basis in the stock c. neither 4. Shareholder basis is affected by a. a loan directly from the shareholder to the corporation b. a personal guarantee on a bank loan to the corporation c. both 5. Giving a note to a corporation for the purchase of additional shares a. increases shareholder ba... click for more

Tax Questions

10. Tropicana Partnership has three partners. Namoli Corporation, with a June 30 year-end, has a 40% interest. Vince and Lou, both individuals with calendar tax years, each have a 30% interest. Assuming Tropicana does not adopt a tax year according to its “natural business year,” what tax year must it adopt? A. December 31 B. June 30 C. Any tax year it wishes D. September 30 11. On December 1, 2003, Victor Company, a cash basis taxpayer, paid $45,000 for 9 months worth [December 2003 through August 2004] of a legitimate business expense. He will deduct this entire amount in 2003 unless it is a payment for: A. Rent B. Interest C. Supplies D. None of these items can be deducted in ... click for more

AMT Adjustments

I need to find Allens' AMT adjustments. Don't we just take the expenses and contributions from his AGI?

Prepaid expenses for Pamello corporation: includible in taxable income or not?

Prepaid Expenses. Pamello, Inc., an engineering consulting firm, uses the cash method of accounting. Compute the amount of Pamello’s current year deductions for the following transactions: a. On November 1 of the current year, it entered into a lease to rent some office space for five years. The lease agreement states that the lease payments are $12,000 per year, payable in advance each November 1 for the following 12-month period. Under the terms of the lease, Pamello is required to pay a $5,000 deposit, refundable upon the termination of the lease. b. On December 1 of the current year, Pamello also renewed its malpractice insurance, paying $18,000 for the three-year contract. ... click for more

Tax reporting for independent contractor income

As an independent contractor for Abe & Murray’s Tax Service, I earned $6,000 during My work from 1/15 through 4/30. Regarding my income, please discuss the following items: What type of income is this? What expenses, if any, could be deducted from the income? What form is used to report income to me and the IRS? What schedule will I fill out to report this to the IRS? What will be my anticipated tax rate? Is it better to be paid as an independent contractor or on-staff at a company?