The Cain Corporation elected S status for the year, and their ordinary taxable income was $450,000....
The Cain Corporation elected S status for the year, and their ordinary taxable income was $450,000. Cain also had $75,000 of long term capital gains in the first month of the year. Brenda owns 35% of Cain for the last 75 days of the year. How much income would Brenda be allocated?
Homework Answers
Cain's ordinary taxable income for the year = $450,000
Proportionate ordinary taxable income for 75 days = $450,000 x 75/365 = $92,465.75
Brenda's share in Cain = 35%
Therefore,
Income allocated to Brenda = $92,465.75 x 35% = $32,363
Note:
Brenda owns 35% of Cain for last 75 days only and Cain had the $75,000 of long-term capital gain in the first month of the year. Therefore, the capital gain will not be allocated to Brenda.
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