Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. lisa, a single taxpayer, owns 100% of capsule corp

Lisa, a single taxpayer, owns 100% of Capsule Corporation, an S corporation. She has a...

90.2K

Verified Solution

Question

Accounting

Lisa, a single taxpayer, owns 100% of Capsule Corporation, an S corporation. She has a $50,000 stock basis for her investment on January 1 of the current year (Year 1). During the first 11 months of Year 1, Capsule reports an ordinary loss of $55,000. The corporation expects an additional $10,000 loss for December. Lisa earn $260,000 of ordinary income from her other activities in Year 1. She expects her other income to decline to $150,000 in Year 2 and continue at that level in future years. The corporation expects Year 2 losses to be only $10,000. Capsule projects a $14,000 profit for Year 3 and each of the subsequent four years.

Requirements:

What advice can you offer Lisa about using her Capsule losses and retaining S corporation status in future years? How would your answer change if Lisa expected her income from other activities to be $35,000 in Year 1 and $260,000 in Year 2?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Discuss using the continuity equation why culverts change flow capacity Explain why having pressurized culvert flow can...

Civil Engineering
Q

The FOllowing information from the accounts of kesha Ltd for the year ended December 31, 2009 has...

Accounting
Q

For what value of P the point 1 1 2 3 and P 2 will...

Physics
Q

Read the following sentence which contains grammatical errors Alexander finally answered after taking a few...

Basic Math
Q

The polynomial p is a function of x The graph of phas four zeros at...

Algebra
Q

5. Bloomington Breweries produces beer and ale. Beer sells for $25...

Accounting
Q

Beat Tako Enterprises had the following accounts and...

Accounting
Q

Driver Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The...

Accounting
Q

Are these answers correct?Assessing Financial Statement Effects of Adjustments For each of the following separate...

Accounting
Q

A county government has an investment in securities, purchased for $80,000, with a current fair...

Accounting
Q

(a) Prepare an incremental analysis for the special order. (Round all per unit computations to...

Accounting
Q

One year ago you bought 100 shares of a British company at a price of...

Finance