The company FPA has the following income, expense, and loss items for the curren
ID: 2549573 • Letter: T
Question
The company FPA has the following income, expense, and loss items for the current year.
Sales $850,000
Tax-exempt interest $40,000
Long-term capital gain $85,000
Short-term capital loss $35,000
Passive activity loss $20,000
Cost of goods sold $480,000
Depreciation $40,000
Section 179 expense $50,000
Other operating expenses $200,000
Net operating loss (from previous year) $24,000
Prepare a calculation of taxable income for the following scenarios and indicate the tax form(s) to report the business activity:
Sole proprietorship
Partnership equally owned by Vinnie and Chandra
Corporation owned by Kim
S corporation owned equally by Henry, Iris, and Jasmine
Primarily the Tax information for the S-corporation, under the most recent tax law
Explanation / Answer
Corporation Owned by KIM Sole Proprietorship PartnerShip Computation of Net Operating Income Computation of Net Operating Income Computation of Net Operating Income Particular Amount Particular Amount Particular Amount Sales 850,000 Sales 850,000 Sales 850,000 Less Cost of Goods Sold 480,000 Less Cost of Goods Sold 480,000 Less Cost of Goods Sold 480,000 Gross Margin 370,000 Gross Margin 370,000 Gross Margin 370,000 LessDepreciation Expense 40,000 LessDepreciation Expense 40,000 LessDepreciation Expense 40,000 Section 179 Expense 50,000 Section 179 Expense 50,000 Section 179 Expense 50,000 Other Operating Expense $200,000 -290,000 Other Operating Expense $200,000 -290,000 Other Operating Expense $200,000 -290,000 Net Operating Income 80,000 Net Operating Income 80,000 Net Operating Income 80,000 Computation of Taxable Income Computation of Taxable Income Computation of Taxable Income Net Operating Income Current Period 80000 Business Income 80000 Business Income 80000 Net Operating Loss Previous Year -24000 Net Operating Loss Previous Year -24000 Net Operating Loss Previous Year -24000 Net Business Income 56000 Net Business Income 56000 Net Business Income 56000 Capital Gain,net Capital Gain,net Capital Gain,net Long Term Capital Gain 85000 Long Term Capital Gain 85000 Long Term Capital Gain 85000 Short Term Capital Loss -35000 Short Term Capital Loss -35000 50000 Short Term Capital Loss -35000 50000 Passive Activity Loss -20000 30000 Taxable Income 106000 Taxable Income 106000 Taxable Income 86000 Form 1120 Form 1040 Form1065