Ms Watts Owns Stock in Two S Corporations, MKP Corporation

question 89

Multiple Choice

Ms. Watts owns stock in two S corporations, MKP Corporation and Reynolds Inc. This year, Ms. Watts had the following income and loss items. If Ms. Watts materially participates in the business of both corporations, compute her AGI.

• A) $85,700
• B) $113,700
• C) $127,700
• D) $155,700

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, with voting rights and potential dividends.

Acid-Test Ratio

A stringent indicator of a company's short-term liquidity, calculated by dividing current assets excluding inventory by current liabilities.

Working Capital

The difference between a company's current assets and its current liabilities, indicating the liquidity of the business.

Financial Data

Quantitative information about financial conditions, performance, and transactions of a business, individual, or entity.