Posted: March 3rd, 2022
Instruction and Requirments:
Instruction and Requirments:
1. Please help to complete the case assignment below.
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2. For each question even include the black of the table, have to show the solution work. Which means must show the calculation of how to get the amount.
3. Please give this on Saturday, March 5th, by 10 PM with Chicago time zone.
The GAAP basis financials of Saldia, Inc. for the year ended 12/31/21 are shown below. On January 1, 2021, Salida had two shareholders. Selena, owned 75% of the stock and Hector owned 25% of the stock. They have both owned their stock since the inception of Seleda in 2017. On March 31, 2021, Hector sold all of his stock to Isabella for $500 (this is Isabella’s starting stock basis). Salida made two distributions during the year. They distributed $70,000 on February 1, 2021 ($52,500 to Selena and $17,500 to Hector) and $10,000 on November 1, 2021 ($7,500 to Selena and $2,500 to Isabella). On January 1, 2021, Selena’s basis in her stock was $2,000. Answer the questions on the following page. (Show your work! Round your answer to the nearest whole dollar)
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Book-tax differences
Tax
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E&P adjustments
Current E&P
Sales
$750,000
CGS
($400,000)
Gross profit
$350,000
Salaries
($250,000)
Entertainment expenses
($6,000)
Depreciation expense
($75,000)
Operating expenses
($331,000)
Ordinary income
$19,000
Dividend income
$22,000
Capital gains
$10,000
Dividend received deduction
Other income (expenses)
$32,000
Net
$51,000
Additional information:
· Salida’s accumulated E&P on January 1, 2021 was $45,000.
· Salida’s MACRS depreciation was $58,000 and ADS depreciation was $95,000 for the year.
· Salida has a capital loss carryforward of $7,000 from 2019.
· The dividends are from a small investment in another corporation. Salida owns less than 1% of the other corporation.
1. What is Salida’s taxable income?
2. What is Salida’s current E&P?
3. For the February 1, 2021 distribution, how much is
a. Dividend
b. Non-dividend distribution
4. For the November 1, 2021 distribution, how much is
a. Dividend
b. Non-dividend distribution
5. How much of the February 1, 2021 distribution is taxed as the following for Selena?
a. Dividend
b. Long-term capital gain
c. Short-term capital gain
d. Not taxed
6. How much of the February 1, 2021 distribution is taxed as the following for Hector?
a. Dividend
b. Long-term capital gain
c. Short-term capital gain
d. Not taxed
7. How much of the November 1, 2021 distribution is taxed as the following for Selena?
a. Dividend
b. Long-term capital gain
c. Short-term capital gain
d. Not taxed
8. How much of the November 1, 2021 distribution is taxed as the following for Isabella?
a. Dividend
b. Long-term capital gain
c. Short-term capital gain
d. Not taxed
9. What is the total of Salida’s current and accumulated E&P after both distributions?
10. What is Selena’s basis in her stock on January 1, 2022 assuming there were no other transactions for the year?
11. What is Isabella’s basis in her stock on January 1, 2022, assuming there were no other transactions for the year?
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Instructions and prerequisites:
1. Please assist in completing the case assignment listed below.
2. For each question even include the black of the table, have to show the solution work. Which means must show the calculation of how to get the amount.
3. Please give this on Saturday, March 5th, by 10 PM with Chicago time zone.
The GAAP basis financials of Saldia, Inc. for the year ended 12/31/21 are shown below. On January 1, 2021, Salida had two shareholders. Selena, owned 75% of the stock and Hector owned 25% of the stock. They have both owned their stock since the inception of Seleda in 2017. On March 31, 2021, Hector sold all of his stock to Isabella for $500 (this is Isabella’s starting stock basis