Question

McLin, Inc., is a calendar year S corporation. Its AAA balance is zero. Determine the tax aspects of the following transactions. If an amount is zero, enter "0". a. McLin holds $90,000 of AEP. Tobias, the sole shareholder, has an adjusted basis of $80,000 in his stock. Tobias is paid a $90,000 salary. Ignore the 20% QBID.

Answer 1

Answer:

$10,000

Explanation:

Given that:

McLin holds $90,000 of AEP,  this implies what is salary is made of;

Tobias, the sole shareholder, has an adjusted basis of $80,000 in his stock.

Tobias is paid a $90,000 salary income.

Ignore the 20% QBID

We are to determine the  tax aspects of the  transactions

Since the company receives a  $90000 for salary expense. Thus Tobias basis is zero, then :

The tax aspect of the transaction  is : ($90000 - $80000)

The tax aspect of the transaction = $10,000