XYZ Corporation (An S Corporation)is Owned by Jane and Rebecca

question 130

Essay

XYZ Corporation (an S corporation)is owned by Jane and Rebecca who are each 50% shareholders.At the beginning of the year,Jane's basis in her XYZ stock was $40,000.XYZ reported the following tax information for 2018.
$\begin{array} { l c c } \text { Description } & \text { Amount } \\\text { Sales reverue } & \$ 30,000 \\\text { Cost of goods sold } & ( 200,000 ) \\\text { Long-tenn capital gain } & 8,000 \\\text { Dividend income } & 5,000 \\\text { Tax exernpt interest } & 3,000 \\\text { Salary to owners } & ( 120,000 ) \\\text { Ermployee wages } & ( 50,000 ) \\\text { Depreciation expenses } & ( 12,000 ) \\\text { Miscellaraous expenses } & ( 10,000 ) \\\text { Overall net incorne } & \$ 354,000\end{array}$ Required:
a.What amount of ordinary business income is allocated to Jane?
b.What is the amount and character of separately stated items allocated to Jane?
c.What is Jane's basis in her XYZ corp.stock at the end of the year?

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Definitions:

Liquidated

Refers to the process of converting assets into cash or using them to pay off liabilities, often in the context of dissolving a business or settling debts.