Sales $850,000 Tax-exempt interest $40,000 Long-term capital gain $85,000 Short-

Question

Sales $850,000
Tax-exempt interest $40,000
Long-term capital gain $85,000
Short-term capital loss $35,000
Passive activity loss $20,000
Cost of goods sold $480,000
Depreciation $40,000
Section 179 expense $50,000
Other operating expenses $200,000
Net operating loss (from previous year) $24,000

Prepare a calculation of taxable income for the following scenarios and indicate the tax form(s) to report the business activity:

Sole proprietorship

Partnership equally owned by Vinnie and Chandra

Corporation owned by Kim

S corporation owned equally by Henry, Iris, and Jasmine

Explanation / Answer

Sales 850000 Less: Cost of Goods Sold 480000 Gross Income 370000 Less: Other operating Expenses 200000 Less: Depreciation 40000 Less: Section 179 expenses 50000 Operating Income taxable 80000 Operating Loss Carry forward -24000 Short term Capital Loss -35000 Passive activity loss -20000 Net Income Chargable to Tax 36000 Long term Capital gain is taxable under Capital Gain Tax. Tax forms: Sole propritership Form 1040 Partnership Form 1065 Corporation Form 1120 S Corporation Form 1120S

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