'Problems 50 & 51 (Ch. 22)\r'

'50. (LO3) crap and Jill ar owners of UpAHill, an S corporation. They own 25 and 75 percent, respectively. a. What center of ordinary income and separately stated items are allocated to them for long time 1 and 2 based on the selective information above? 1st social class or Year 1: Ordinary income is 42,500. 00 42,500*25% = 10,625 is allocated to Jack 42,500*75% = 31,875 is allocated to Jill Separately Stated Items: Interest Income 2,000. 00 500. 00 is allocated to Jack 1,500. 00 is allocated to Jill Divid last Income: 1,000. 00 250. 00 allocated to Jack 750. 00 allocated to Jill b. Complete UpAHill’s Form 1120S, entry K, for twelvemonth 1.\r\nSee attached c. Complete Jill’s 1120S, Schedule K-1, for year 1. See attached Schedule51. (LO3, LO4)Assume Jack and Jill, 25 and 75 percent shareholders in UpAHill corporation, have impose bases in their shares at the beginning of year 1 of $24,000 and $56,000, respectively. Also assume no distributions were made. Given the income disceptation above, what are their tax bases in their shares at the end of year\r\n1. Considering the 24,000 and 56,000 respectively, Jack tax basis is compute with his original cost of 24,000 + 10,625 + 500 + 125 = 32,250. 00 Jill 56,000 + 31,875 + 1,500 + 375 = 89,750. 00 1. LO1) Joey is a 25 percent owner of Loopy LLC. He no longer wants to be involved in the business. What options does Joey have to exit the business? The remedy to Joeys show up should be contained within the operating agreement. In nearly states such as CA, this is a requirement for LLC’s. In some cases where operating agreements are not available, a buy out membership interest dismantle the LLC may be the only options.\r\n2. (LO1) Compare and separate the aggregate and entity surfacees for a sale of a alliance interest. Two approaches govern the rules governing the federal tax revenue of unions and partners†aggregate and entity.\r\nThe aggregate, also known as conduit approach views a partnership as though each partner owned the assets and liabilities of the partnership. An entity approach treats the partnership and its partners as separate entities. Whereas congress is aware, the two approaches are upset(a) due to nonspecific statutory language whirl guidance. Under the aggregate approach, section 701 recommends that the owners are drug-addicted to tax, not the partnership. The entity approach is recommended by the IRS that subchapter K describe this approach with respect to partnership interest transactions.\r\nWhat restrictions business leader prevent a partner from selling his partnership interest to a third party? Restrictions on the activities of general partner places a limit on the amount of private investments management of a pretend capital can make from any private investment. General partners are limited in their efficacy to sell their general partnership interest in the venture fund to a third party. These sales would reduce the general pa rtner’s fillip to monitor and produce an effective exit scheme for the venture fund portfolio companies.\r\n'