Reference no: EM132825664
XYZ Corporation (an S corporation) is owned by Jane and Rebecca, who are each 50 percent shareholders. At the beginning of the year, Jane's basis in her XYZ stock was $40,000. XYZ reported the following tax information for 2019.
Description Amount
Sales revenue $ 730,000
Cost of goods sold (200,000)
Long-term capital gain 8,000
Dividend income 5,000
Tax-exempt interest 3,000
Salary to owners (120,000)
Employee wages (50,000)
Depreciation expenses (12,000)
Miscellaneous expenses (10,000)
Overall net income $ 354,000
Problem 1: What amount of ordinary business income is allocated to Jane?
Problem 2: What is the amount and character of the separately stated items allocated to Jane?
Problem 3: What is Jane's basis in her XYZ Corporation stock at the end of the year?