Chapter 22 Xiaonan Li
11. a. No.
b. No.
c. No.
d. Yes.
e. Yes

19. a. – d. + g. – j. + m. +
b. + e. – h. – k. + n. –
c. – f. + i. – l. – o. –

24. a. Net sales $140,020
Depreciation recapture income 14,000
$154,020
Deduct:
Cost of goods sold $42,000
Administrative expenses 15,000
Depreciation expense 13,000 (70,000)
Nonseparately computed income $ 84,020
b. $84,020 ÷ 4 = $21,005

28. a. Absent a per-books election, the income is allocated by assigning an equal portion of the annual income of $1 million to each day (or $2,739.72 per day) and allocating the daily portion among the two shareholders. Thomas is allocated 50% of the daily income for 90 days from January 1 through April 1, or $124,657.72 ($2,739.73 ÷ 2 ×91). Thomas’s estate would be allocated 50% of the income for the 274 days from April 2 through December 31, or $375,342.28 ($500,000 – $124,657.72). Ralph would be allocated $500,000 for the full year.
b. If the per-books election is made, the income of $400,000 from January 1 through
April 1 is divided equally between Ralph and Thomas, so that each would be allocated $200,000. The income of $600,000 from April 2 through December 31 is divided equally between Ralph and Thomas’s estate, or $300,000 to each.

34. a. Beginning AAA $715,000
Add:
Sales income $206,000
Dividend income 17,000
Interest income 3,000
$226,000
Less:
Real estate loss $ 5,000
Charitable contributions 22,000
§ 179 expense 2,500
Administrative expenses 41,000 (70,500)
$870,500
Less distributions