the profit and loss statement of Strategy, Inc., an S corporation, shows net pro
ID: 2361627 • Letter: T
Question
the profit and loss statement of Strategy, Inc., an S corporation, shows net profits of $101,000 (book income). The corporation has four equal shareholders. From supplemental data, you obtain the following about some items that are included in the $101,000.selling expenses ($19,200)
municipal bond interest income 2,000
dividends receiving on Boeing stock 8,000
section 1231 gain 6,000
depreciation recapture income 13,000
passive income 3,000
short-term capital loss (9,000)
salary paid to owners (each) (11,000)
cost of goods sold (81,000)
a. determine the nonseparately computed income or loss.
b. what is the portion of ordinary income or loss for Zariat, one of the shareholders?
Explanation / Answer
a. determine the nonseparately computed income or loss.
Separately stated income / (loss)
Municipal bond interest income $2,000
Dividends receiving on Boeing stock $8,000
Section 1231 gain $6,000
Short-term capital loss ($9,000)
Total separately stated income $7,000
Nonseparately computed Income
Book Income $101,000
Less : Total separately stated income $7,000
Nonseparately computed Income $94,000
b. what is the portion of ordinary income or loss for Zariat, one of the shareholders?
Zariat portion of ordinary income = $94,000 / 4 = $23,500
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