Rob and Wilma formed Apollo Corporation as an S corporation, with each shareholder contributing $7,000...
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Accounting
Rob and Wilma formed Apollo Corporation as an S corporation, with each shareholder contributing $7,000 in exchange for stock. In addition, Wilma loaned the corporation $6,000, and the corporation borrowed another $12,000 from the bank. In the current year, the corporation incurred a $24,000 operating loss. In the next year, the corporation will earn $18,000 of operating income.
Requirements:
A. For the current year and next year, determine the pass-through items for each shareholder and each shareholder's stock basis at the end of each year. Also, determine Wilma's debt basis at the end of each year.
B. Same as Part a except the corporation also distributes $5,000 cash to each shareholder at the end of next year.
C. Assume the same facts as in Part b and that Apollo is a partnership instead of an S corporation. For the current year and next year, determine thepass-through items for each partner and each partner's basis in his or her partnership interest at the end of each year.
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