Question

On January 1, Bobby and Alice equally own all of the stock of an electing S corporation called Prairie Dirt Delight. The entity incurs a $60,000 loss for a nonleap year. On the 200th day of the year (not a leap year), Bobby sells his one-half of the stock to his son, Saul. How much of the $60,000 loss, if any, is allocated to Bobby?

Answer 1

$16,438

Step-by-step explanation:

If we assume that Bobby and Alice owned 50% of Prairie Dirt Delight each, then the loss will be divided in two.

Since Bobby sold his part to his son on the 200th day, then the portion of the loss that will be allocated to him will be = ($60,000 x 50%) x 200/365 = $16,438.36 ≈ $16,438