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:

Mass Media

Diverse media technologies that reach a large audience via mass communication, including newspapers, television, radio, and the internet.

Business Influence

The impact that companies or industries have on economic policies, consumer behavior, and the market environment.

Observations

The action or process of closely observing or monitoring something or someone.

Hypotheses

Proposed explanations for a phenomenon, meant to be tested through experimentation or observation.