CSU, Inc., is a calendar year S corporation. CSU’s Form 1120Sshows nonseparately stated ordinary income of $120,000 for theyear. Taewon owns 30% of the CSU stock throughout the year. Thefollowing information is obtained from the corporate records.
Tax-exempt interest income | $?4,500 |
Salary paid to Taewon | (78,000) |
Charitable contributions | (9,000) |
Dividends received from a non-U.S. corporation | 7,500 |
Short-term capital loss | (9,000) |
Depreciation recapture income | 16,500 |
Refund of prior state income taxes | 7,500 |
Cost of goods sold | ($108,000) |
Long-term capital loss | (10,500) |
Administrative expenses | (27,000) |
Long-term capital gain | 21,000 |
Selling expenses | (16,500) |
Taewon’s beginning stock basis | 48,000 |
Taewon’s additional stock purchases | 13,500 |
Beginning AAA | 46,500 |
Taewon’s loan to corporation | 30,000 |
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- Compute CSU’s taxable income or loss, showing the calculation(on a “white paper” schedule not on IRS forms). Taxable incomeshould equal Form 1120S, Schedule K, line 18, which should be thesame as Form 1120S, Schedule M-1, line 8. Assume the I.R.C. section1374 and 1375 taxes do not apply. HINT: the refund of prior stateincome taxes is taxable other income. TI check figure$127,500.
