[Anonymous]

Tap, a calendar-year S corporation, reported the following items of income and expense in the current year:

Revenue $ 44,000

Operating expenses 20,000

Long-term capital loss 6,000

Charitable contributions 1,000

Interest expense 4,000

What is the amount of Tap’s ordinary income?

a. $13,000

b. $19,000

c. $20,000

d. $24,000

The correct answer is C. (44,000 – 20,000 – 4,000) According to Becker, separately stated items include dividends, interest, capital gains, and losses. So why is the interest expense is subtracted from ordinary income?

Thanks!

[gabarmaiz]

the interest expense was incurred in the ordinary course of business of the s corp. probably from a mortgage, note or any type of payable. The other items are presented in other box in the k-1 and the shareholder will present it in his tax return.

[gabarmaiz]

the interest expense was incurred in the ordinary course of business of the s corp. probably from a mortgage, note or any type of payable. The other items are presented in other box in the k-1 and the shareholder will present it in his tax return.

[Author]

Replies