Tiger Corp is a calendar year taxpayer that elected S status in its first year...
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Tiger Corp is a calendar year taxpayer that elected S status in its first year of operations. Tiger is owned by Herbert (600 shares with beginning AB = $12,000) and Leath (400 shares with beginning AB = $8000). The income statement for Tiger Corp is presented below. The corporations beginning AAA balance was -$30,000, OAA was $1,000, and Accumulated E&P from prior years as a C corp was $1,000. Sales Revenue $105,000 Municipal bond income $5,000 Cost of goods sold ($45,000) Salary expense to owners ($20,000) Employee wages ($5,000) Net STCG stock sale $2,000 Depreciation expense ($10,000) Charitable contributions ($1,000) Fines and Penalties ($2,000) Net Income $29,000 Tax depreciation is $15,000 of which $5,000 is Sec. 179 depreciation. Tiger Corp also made a $10,000 distribution.
Provide a book-tax reconciliation above and distinguish between ordinary business income (loss) and separately stated items (taxable and nontaxable). Determine the ending balances in all entity level accounts after the distribution. Determine Harberts ending adjusted basis. What is the tax treatment of the distribution to Harbert?
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