At the beginning of the year, Ann and Becky own equally all of the stock of Whit
ID: 2418237 • Letter: A
Question
At the beginning of the year, Ann and Becky own equally all of the stock of Whitman, Inc., an S corporation. Whitman generates a $120,000 loss for the year (which is not a leap year). On the 189th day of the year, Ann sells her half of her Whitman stock to her son, Scott. Becky's stock basis is $41,300.
Complete the statements below that outlines how much of the loss, if any, belongs to Scott.
Note the following: (1) In your computations, round any fractions to four decimal places and then (2) round the final answer to the nearest dollar.
The Whitman loss belonging to Ann is $
Explanation / Answer
Becky's stock basis is $41,300 which is equal to half of Ann's basis that is $82,600 ($41,300 + $41,300).
Loss belongs to Scott = {$120,000*($41,300/$82,600)}*176 days/365 days
= $60,000*176 days/365 days
= $28,932
Therefore, loss belongs to Scot is $28,932.
Working note = Days in year (not leap year) - Days not belong to Scot
= 365 days in year - 189 days
= 176 days
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