Income Statement
December 31, Year 1 and Year 2
Sales revenue
Cost of goods sold
Salary to owners Julio and Milania
Employee wages
Depreciation expense
Section 179 expense
Interest income (related to business income)
Municipal bond Income
Government fines
Overall net income
Distributions
Year 1
$ 300,000
(40,000)
(40,000)
(25,000)
(20,000)
(30,000)
12,000
1,500
0
$ 158,500
$ 30,000
Year 2
$ 430,000
(60,000)
(80,000)
(50,000)
(40,000)
(50,000)
22,500
4,000
(2,000)
$ 174,500
$ 50,000
a. What amount of ordinary income and separately stated items are allocated to them for year 1 baser
that Falcons Corporation has $200,000 of qualified property (unadjusted basis)
Amount
Allocated to
Julio
Allocated to
Milania
Ordinary Income
Qualified business income
Municipal bond income
Section 179 expense
Allocated wages
Distributions
Unadjusted basis of qualified property
1,500
30,000
750
15,000
750
15,000
$ 30,000
$ 200,000
$ 15,000
$ 100,000
$ 15,000
$ 100,000
Prev
1 of 1
Next
