In the past several years, Shakira had loaned money to Shakira Incorporated (an S corporation) to help the corporation keep afloat in a downturn. Her stock basis in the S corporation is now $0, and she has deducted $42,750 in losses, reducing her debt basis from $142,500 to $99,750. Things appear to be turning around this year, and Shakira Incorporated repaid Shakira $28,500 of the $142,500 outstanding loan. What is Shakira's income, if any, on the partial loan repayment?

Mrs X runs a small business. At the beginning of the calendar year, her owner’s equity consisted solely of a capital contribution of R280 000; her liabilities stood at R410 000; and she had R690,000 worth of assets. During the calendar year, she made a profit of R60 000. She also increased her capital contribution to R330 000, and paid down her debts by R40,000. At the end of the calendar year, what amount would her assets be sitting at?   a.R690 000 b.R710 000 c.R700 000 d.R760 000 e.R800 000

Unfortunately, Betty’s business was not profitable. She decided to sell the business andseek work in a different industry. She sold her business in May 2020 after spending$22,000 on advertising the sale with an estate agent. Unfortunately, the sales proceedswere not sufficient to discharge her existing bank loan and she was required to makeregular monthly interest payments on the outstanding balance.Please discuss whether the advertising expenses would be deductible

Trevorson Electronics is a small company privately owned by Jon Trevorson, an electrician whoinstalls wiring in new homes. Because the company’s financial statements are prepared only for taxpurposes, Jon uses the direct write-off method. During 2015, its first year of operations, TrevorsonElectronics sold $30,000 of services on account. The company collected $26,000 of these receivables during the year, and Jon believed that the remaining $4,000 was fully collectible. In 2016,Jon discovered that none of the $4,000 would be collected, so he wrote off the entire amount. Tomake matters worse, Jon sold only $5,000 of services during the year.Required:1. Prepare journal entries to record the transactions in 2015 and 2016.2. Using only the information provided (ignore other operating expenses), prepare comparativeincome statements for 2015 and 2016. Was 2015 really as profitable as indicated by its incomestatement? Was 2016 quite as bad as indicated by its income statement? What should Jon…

corporation, was formed three years ago by its sole shareholder, James, who has operated it as an S corporation since its inception. Last year, James made a direct loan to Birch Corp. in the amount of $5,000. Birch Corp. has paid the interest on the loan but has not yet paid any principal. (Assume the loan qualifies as debt for tax purposes.) For the year, Birch experienced a $30,000 business loss. At the beginning of the year, James’s basis in his Birch Corp. stock was $8,000 and his basis in his Birch Corp. debt was $5,000. What amount is the amount of suspended loss at the end of the year?

Rebecca is a 20% part owner in a bar. She invested $100,000 for her ownership interest. She also works as a manager of the bar and is paid $50,000/year. Due to financial difficulties of the bar, she loans it $100,000 in 2013. Nevertheless, the bar goes bankrupt in 2014 and the trustees tell Rebecca she can expect no better than $10,000 back on her $100,000 loan, although the case will be in bankruptcy for several more years. What are the 2014 tax consequences to Rebecca from the loan? Explain in full.

Stephenson Real Estate Company was founded 25 years ago by the current CEO, Robert Stephenson.The company purchases real estate, including land and buildings, and rents the property totenants. The company has shown a profit every year for the past 18 years, and the shareholdersare satisfied with the company’s management. Prior to founding Stephenson Real Estate, Robertwas the founder and CEO of a failed alpaca-farming operation. The resulting bankruptcy madehim extremely averse to debt financing. As a result, the company is entirely equity financed, with12 million shares of common stock outstanding. The stock currently trades at $48.50 per share.Robert is evaluating a plan to purchase a huge tract of land in eastern Canada for $45 million.The land will subsequently be leased to tenant farmers. This purchase is expected to increase Stephenson’sannual pre-tax earnings by $11 million in perpetuity. Kim Weyand, the company’s newCFO, has been put in charge of the project. Kim has determined…

Stephenson Real Estate Company was founded 25 years ago by the current CEO, Robert Stephenson.The company purchases real estate, including land and buildings, and rents the property totenants. The company has shown a profit every year for the past 18 years, and the shareholdersare satisfied with the company’s management. Prior to founding Stephenson Real Estate, Robertwas the founder and CEO of a failed alpaca-farming operation. The resulting bankruptcy madehim extremely averse to debt financing. As a result, the company is entirely equity financed, with12 million shares of common stock outstanding. The stock currently trades at $48.50 per share.Robert is evaluating a plan to purchase a huge tract of land in eastern Canada for $45 million.The land will subsequently be leased to tenant farmers. This purchase is expected to increase Stephenson’sannual pre-tax earnings by $11 million in perpetuity. Kim Weyand, the company’s newCFO, has been put in charge of the project. Kim has determined…

Trevorson Electronics is a small company privately owned by Jon Trevorson, an electrician who installs wiring in new homes. Because the company's financial statements are prepared only for tax purposes, Jon uses the direct write-off method. During 2018, its first year of operations, Trevorson Electronics sold $28,400 of services on account. The company collected $25,200 of these receivables during the year, and Jon believed that the remaining $3,200 was fully collectible. In 2019, Jon discovered that none of the $3,200 would be collected, so he wrote off the entire amount. To make matters worse, Jon sold only $5,100 of services during the year. Required: 1. Prepare journal entries to record the transactions in 2018 and 2019. 2-a. Using only the information provided (ignore other operating expenses), prepare comparative income statements for 2018 and 2019. 2-b. Was 2018 really as profitable as indicated by its income statement? 2-c. Was 2019 quite as bad as indicated by its income…

Trevorson Electronics is a small company privately owned by Jon Trevorson, an electrician who installs wiring in new homes. Because the company's financial statements are prepared only for tax purposes, Jon uses the direct write-off method. During 2018, its first year of operations, Trevorson Electronics sold $28,400 of services on account. The company collected $25,200 of these receivables during the year, and Jon believed that the remaining $3,200 was fully collectible. In 2019, Jon discovered that none of the $3,200 would be collected, so he wrote off the entire amount. To make matters worse, Jon sold only $5,100 of services during the year. Required: 1. Prepare journal entries to record the transactions in 2018 and 2019. 2-a. Using only the information provided (ignore other operating expenses), prepare comparative income statements for 2018 and 2019. 2-b. Was 2018 really as profitable as indicated by its income statement? 2-c. Was 2019 quite as bad as indicated by its income…