Hi guys, I need help with these question. Thank you so much On January 1,...
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Hi guys, I need help with these question. Thank you so much
On January 1, 2022, Sam and Sara formed a new business entity called Nice Brother Co. Sam contributes $250,000 cash and Sara contributes land with an adjusted basis of $300,000 and fair market value of $492,000 with a mortgage of $258,000 that is assumed by Nice Brother Co.
Assume the following operating results for 2022:
Sales
$ 1,500,000
Interest income from a bank
$ 3,200
Royalties
$ 60,000
Loss from sale of investment
$ (7,000)
Cost of goods sold
$ 622,000
Salaries
$ 450,000
Rent
$ 144,000
Maintenance
$ 24,000
Utilities
$ 58,000
EPA penalty
$ 1,000
Depreciation
?
Charitable contribution
$ 30,000
Payment to Sam for retirement*
$ 15,000
*payment considered a guaranteed payment if the entity is a partnership
The companys only depreciable asset is equipment (useful life of 5 years) which will be purchased in 2022 for $100,000.
The only asset sold was an investment purchased on 2/2/22 for $28,000 and sold on 11/4/22 for $21,000
What is Saras basis in the entity at the end of 2022 if the entity is a C Corporation, Partnership and S Corporation?
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