[SoCalCPA]

I understand that S corps report items separately. For the question below, does anyone know how the question would be different if it were relating to the “distributed” amount of $100K?

Q) Bob has a 40% interest in S corp. At the beginning of the year, Bob’s basis in S corp was $2K. During the year, S corp distributed $100K and reporting operating income of $200K. What amount should Evan include in gross income?

A) Operating Income * ownership % = $200k * 40% = $80K.

So again, my question is

1) What would the question say if I were to use the $100K instead of $200K?

2) In what case would I use Bob’s basis of $2K in this type of question?

Thanks!

B - (4/2012)
A - (5/2012)
R - (1/2012) Done!
F - (10/2011) Done!

[Anonymous]

To use that $100,000 distribution they would ask you what your basis would be after the distribution. Obviously that would decrease your basis by your %.

[hopeful_cpa]

First of all you have Evan and Bob.

Second, If the s-corps operating income were 100k, then Evan's gross income would be 40k.

You would use the basis of the stock holder in determining the basis of the stockholder after distribution to the stockholder.

Ex. If the corp distributed 100k and the operating income was 100k, Evans stock basis would be 2k+40k-40k = 2k.

In the original problem, 100k distribution and 200k operating income, Evans stock basis would be 2k+80K-40K = 42k.

BEC: Done
REG: Done
AUD: Done
FAR: Done

I'M DONE!!!!!! AAAAAAAAAAAAAAAAAAAAAAHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[SoCalCPA]

Oh nice, thank you both! So from this type of question, it is either gross income or basis question. Awesome, thanks again!

B - (4/2012)
A - (5/2012)
R - (1/2012) Done!
F - (10/2011) Done!

[hopeful_cpa]

lol this is helping me study also haha

BEC: Done
REG: Done
AUD: Done
FAR: Done

I'M DONE!!!!!! AAAAAAAAAAAAAAAAAAAAAAHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Anonymous]

Ya, this website helps me study too.

[Author]

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