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Jack and Jill are owners of UpAHill, an S corporation. They own 25 and 75 percent, respectively.
| UpAHill Corporation (an S corporation) |
| Income Statement |
| December 31, Year 1 and Year 2 |
| | Year 1 | | Year 2 |
| Sales revenue | $ | 175,000 | | | $ | 310,000 | |
| Cost of goods sold | | (60,000 | ) | | | (85,000 | ) |
| Salary to owners Jack and Jill | | (40,000 | ) | | | (50,000 | ) |
| Employee wages | | (15,000 | ) | | | (20,000 | ) |
| Depreciation expense | | (10,000 | ) | | | (15,000 | ) |
| Miscellaneous expenses | | (7,500 | ) | | | (9,000 | ) |
| Interest income (related to business) | | 2,000 | | | | 2,500 | |
| Qualified dividend income | | 500 | | | | 1,000 | |
| Overall net income | $ | 45,000 | | | $ | 134,500 | |
| |
b. Complete UpAHills Form 1120S, Schedule K, for year 1.
c.Complete Jills 1120S, Schedule K-1, for year 1.
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