# Monie, an individual taxpayer, owns 50% of Monie & Co, an S Corporation. At the beginning of...

## Question:

Monie, an individual taxpayer, owns 50% of Monie & Co, an S Corporation. At the beginning of 20X4, Monie's basis in Monie & Co stock was $55,000. During 20X4, Monie & Co realized an ordinary loss in the amount of$45,000 and a short-term capital loss of $15,000. Monie & Co made total distributions of$70,000 to its shareholders during this taxable year.

What amount of the $70,000 distribution is taxable to Monie? ## Taxable income: Taxable income is the actual amount on which the tax liability is calculated from all the sources after allowing the deductions as per the sections of the income tax act. ## Answer and Explanation: Calculation of at what amount of the$70,000 distribution is taxable to Monie

 Particulars Amount$Initial stock basis$55,000 Share of Monie in ordinary loss and short term capital loss ($45,000 +$15,000) * 50% $30,000 Stock basis before distribution of dividend 25,000 less Monie distribution of dividend (70,000 * 50%) 35,000 Taxable amount taxed under capital gain$10,000