Jamya and Manu are the shareholders of Buffalo Corporation an S Corporation. They each own 50% of Buffalo Corporation. In Year 1, Jamya and Manu each received distributions of $30,000 from Buffalo Corporation. In Year 2, they received distributions each of $50,000.

Buffalo Corporation (an S Corporation)

Income Statement, Dec. 31, 20×8 and 20X9

20X8(Year 1) 20X9(Year 2)

Sales revenue $600,000 $860,000

Cost of goods sold (80,000) (120,000)

Salary to shareholders Manu and Jamya (80,000) (160,000)

Employee wages (50,000) (100,000)

Depreciation expense (40,000) (80,000)

Section 179 expense (60,000) (100,000)

Interest income ( related to business) 24,000 45,000

Municipal bond income 3,000 8,000

Government fines 0 (4000)

Overall net income 317,000 349,000

Distributions $60,000 $100,000

Requirements:

-Determine and explain the amount of ordinary income and separately stated items allocated to them for Year 1 based on the information given in the table above. Assume that Buffalo Corporation has qualified property with an unadjusted basis of $400,000.

-Using ProConnect and/or fill in forms, complete the S Corporation Form 1120S, Schedule K for Year 1 and Schedule K-1 for Jamya.

-Determine and explain the amount of ordinary income and separately stated items are allocated to them for Year 2 based on the information given in the table above, assuming Buffalo Corp has qualified property with an unadjusted basis of $400,000.

-Using ProConnect and/or fill in forms, complete the S Corporation Form 1120S, Schedule K for Year 2 and Schedule K-1 for Manu.

Submit a Schedule K, and one Schedule K-1 for Jamya and one for Manu and a Word document for questions a), and b), or one Word document with embedded Schedule K, and Schedule K-1 in the document.

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