| August 14, 2017

Problems 50 & 51 (Ch. 22)

Use the following information to complete problems 50 and 51:


50. (LO3)Jack and Jill are owners of UpAHill, an S
corporation. They own 25 and 75 percent, respectively.

a. What amount of ordinary income and separately stated items are
allocated to them for years 1 and 2 based on the information above?

b. Complete UpAHill’s Form 1120S, Schedule K, for year 1.

c. Complete Jill’s 1120S, Schedule K-1, for year 1.

51. (LO3, LO4)Assume Jack and Jill, 25 and 75 percent
shareholders in UpAHill corporation, have tax bases in their shares at the
beginning of year 1 of $24,000 and $56,000, respectively. Also assume no
distributions were made. Given the income statement above, what are their tax
bases in their shares at the end of year 1?

Discussion Questions 1, 2, & 3 (Ch. 25)
1. (LO1)Identify the features common to the gift tax formula
and the estate tax formula.

2. (LO1) Explain why Congress felt it necessary to enact a gift tax
to complement the estate tax.

3. (LO1)Describe the unified credit and the purpose it
serves in the gift and estate tax.

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