Problem - Valence Corporation's Form 1120S shows ordinary income of $88,000 for the year. Daniel owns 40% of the Valence stock throughout the year. The following information is obtained from the corporate records.
Salary paid to Daniel ($40,000)
Tax-exempt interest income 5,000
Charitable contributions (6,000)
Dividends received from non-U.S. corporation 5,000
Long-term capital loss (6,000)
Depreicaiton recapture income 11,000
Refund of prior-year state income taxes 5,000
Cost of goods sold (80,000)
Short-term capital loss (7,000)
Administrative expenses (18,000)
shor-term capital gain 14,000
selling expenses (11,000)
Daniel's beginning stock basis 32,000
Daniel's additional stock purchases 9,000
Beginning AAA 45,000
Daniel's loan to corporation 20,000
Required -
a. Compute Valence's book income or loss.
b. Compute Daniel's ending stock basis.
c. Calculate ending corporate AAA.