Problems 50 & 51 (Ch. 22)

50. (LO3)Jack and Jill argon 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 ground on the information above? 1st Year or Year 1 Ordinary income is 42, vitamin D. 00 42,500*25% = 10,625 is allocated to Jack 42,500*75% = 31,875 is allocated to Jill Separately Stated Items Interest Income 2,000. 00 500. 00 is allocated to Jack 1,500. 00 is allocated to Jill Dividend Income 1,000. 00 250. 00 allocated to Jack 750. 00 allocated to Jill b. Complete UpAHills arrive at 1120S, Schedule K, for year 1.See link c. Complete Jills 1120S, Schedule K-1, for year 1. See attached Schedule51. (LO3, LO4)Assume Jack and Jill, 25 and 75 percent shareholders in UpAHill corporation, have tax bases in their shares at the fount 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 i n their shares at the end of year1. Considering the 24,000 and 56,000 respectively, Jack tax basis is calculated with his original cost of 24,000 + 10,625 + 500 + 125 = 32,250. 00 Jill 56,000 + 31,875 + 1,500 + 375 = 89,750. 00 1. LO1) Joey is a 25 percent owner of Loopy LLC. He no longer wants to be involved in the business. What options does Joey have to exit the business? The remedy to Joeys issue should be contained within the run agreement. In some states such as CA, this is a requirement for LLCs. In some cases where operating agreements are not available, a buy out membership interest dissolve the LLC may be the whole options.2. (LO1) Compare and contrast the aggregate and entity approaches for a sale of a federation interest. Two approaches govern the rules judicature the federal taxation of partnerships and partners aggregate and entity.The aggregate, also known as conduit approach views a partnership as though each partner owned the assets and liabilities of the partne rship. An entity approach treats the partnership and its partners as separate entities. Whereas congress is aware, the both approaches are confused due to nonspecific statutory language offering guidance. Under the aggregate approach, segment 701 recommends that the owners are subject to tax, not the partnership. The entity approach is recommended by the IRS that subchapter K follow this approach with respect to partnership interest transactions.What restrictions might prevent a partner from selling his partnership interest to a tertiary party? Restrictions on the activities of general partner places a limit on the amount of private investments oversight of a venture capital can make from any private investment. General partners are exceptional in their ability to sell their general partnership interest in the venture fund to a third party. These sales would reduce the general partners incentive to monitor and produce an legal exit strategy for the venture fund portfolio compa nies.