Falcon, Inc., is a calendar-year-end S corporation owned equally by two shareholders, Jennifer Sullivan and Marvin Darby. Falcon reports its income and expenses on the accrual method of accounting. Falcon has always been an S corporation and has no debt. Falcon's controller has provided information for the completion of Falcon's year 4 Form 1120S, U.S. Income Tax Return for an S Corporation. A copy of Falcon's income statement for the year ended December 31, year 4, and additional information related to Falcon and its shareholders can be found in the exhibits above.
You have been asked to review the documents provided by Falcon's controller and assist in the preparation of Form 1120S. For each item in column A, calculate the value and enter it in the associated cell in column B. Enter income and gains as positive values and losses and expenses as negative values. If an answer is zero, enter a zero (0).
2 Falcon's year 4 ordinary business income (loss) to be reported on Form 1120S
3 Sum of Falcon's year 4 separately stated items of taxable income and deductible expense to be reported on Form 1120S, Schedule K, Shareholders' Pro Rata Share Items
4 Falcon's year 4 nondeductible expenses
5 Falcon's December 31, year 4, accumulated adjustment account balance
6 Jennifer Sullivan's shareholder tax basis at December 31, year 4
Can someone explain answers for 2/3 on this sample SIM?
Thanks
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