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Melinda has a 30% ownership interest in an entity for which she initially contributed $180,000. She is one of the original owners of the business. None of the owners are related. During the life of the business, the following have occurred: Cumulative losses of $250,000 during the first 3 years, Profits of $200,000 in the next year, Distributions to owners of $90,000 at the end of year 3, Distribution to Melinda of $50,000 that redeems 25% of her ownership interest at the end of year 4. No other owners redeem any of their ownership interest. Determine the tax consequences to Melinda if the entity is a partnership, an S corporation or C corporation.

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  • Category:- Accounting Basics
  • Reference No.:- M956305

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