Marvin and Marshall Own and Operate MM Company,an Electing S

question 52

Essay

Marvin and Marshall own and operate MM Company,an electing S corporation.Marvin owns 75% and Marshall owns 25% of MM's stock.During the current year,MM has the following results:
$\begin{array} { l r } \text { Revenues } & \$ 350,000 \\ \text { Operating expenses } & 185,000 \\ \text { Marvin's salary } & 40,000 \\ \text { Marshall's s al ary } & 85,000 \\ \text { Municipal bond interest income } & 12,000 \\ \text { Long-term capital loss } & 30,000 \\ \text { Charitable contributions } & 20,000 \end{array}$

a. How must MM report these results to Marvin and Marshall? Show calculations.


b. Marvin is a single taxp ayer with no dependents. He has total income from other sources of $\$ 68,000$ , which includes a $\$ 26,000$ long-term capital gain. He has $\$ 11,400$ of other allowable itemized deductions. Cal culate Marvin's taxable income and his income tax liability.

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Definitions:

Responsiveness

The ability or tendency of an entity or system to react to changes, stimuli, or feedback from the environment.

Complements

Products that are usually consumed jointly (for example, bread and butter, hot dogs and hot dog buns). A decrease in the price of one will cause an increase in demand for the other.

Consumption

The use of goods and services by households or individuals, typically relating to how these actions affect economic demand.

Market Demand

The total amount of a product or service that all consumers in a market are willing and able to purchase at various prices.