CSU, Inc., is a calendar year S corporation. CSU’s Form 1120S shows nonseparately stated ordinary income...

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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
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.

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3.9 Ratings (459 Votes)

Ordinary Income 120000 Add Seprately Stated item Dividend Received 7500 Tax excerpt interest 4500 Recovery of State Taxes 7500 Long Term Capital See Answer

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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