Problem 11-11 S Corporations (LO 11.6) Bill and Guilda each own 50 percent of th
ID: 2393945 • Letter: P
Question
Problem 11-11 S Corporations (LO 11.6) Bill and Guilda each own 50 percent of the stock of Radiata Corporation, an S corporation. Guilda's basis in her stock is $21,000. On May 26, 2017, Bill sells his stock, with a basis of $40,000, to Loraine for $so,000. For the 2017 tax year, Radiata Corporation has a loss of $104,000. Round your final answers to the nearest dollar. Use a 365-day year in your computations. a. Calculate the amount of the corporation's loss that may be deducted by Bil on his 2017 tax return. Calculate the amount of the corporation's loss that may be deducted by Guida on her 2017 tax return. 21,000 Feedbeck Check My Work Correct return c. Calculate the amount of the corporation's loss that may be deducted by Loraine on her 2017 tax Check My Work IncorrectExplanation / Answer
Answer:
a) Amount of corporation loss may be deducted by Bill:
Share of Stock Ownership: 50%
Period of Holding: January 1 to May 26 = (31 + 28 + 31 + 30 + 26) = 146 days
= 104,000 * 50% * 146/365 = $ 20,800
b) Corporation loss that may be deducted by Guida:
Guida can claim only loss up to the amount of his basis in the stock that is $ 21,000.
c) Amount of corporation loss that may be deducted by Loraine:
He can claim the deduction of loss for days (365-146) 219 :
= 104,000 * 50% * 219/365 = $31, 200.