Sullivan Machinery LLC Case Study - Sold Blue - Accounting Assignment Help

Assignment Task:

Sullivan Machinery LLC Case Study Accounting Assignment Help

Practice Set #2
John Sullivan is age 62. He lives at 15 North Tustin Ranch Road Tustin, CA 92782 (which was sold see below). His Social Security number is 122-55-1112. John was divorced to his first wife in 2015. He pays $20,000 annually of alimony to his ex-wife Elizabeth (Social Security Number 555-55-7566). He married his new wife Ann (Social Security Number 213-310-1222 in 2017. Ann does not work.

John owns Sullivan Machinery LLC, a single member limited liability company and manufacturers cabinets for which he uses the cash method of accounting and maintains no inventory. His revenues and expenses are:

During the year, John also had the following transactions:
Sold Blue, Inc. stock for $30,000 on March 12, 2018. He had purchased the stock on September 5, 2015, for $50,000. Received an inheritance of $250,000 from his uncle and life insurance of $100,000, Henry. John used $250,000 to purchase Green, Inc. stock on May 15, 2018, and invested $100,000 in Gold, Inc. stock on May 30, 2018.

Received Orange, Inc. stock worth $20,000 as a gift from his aunt, Jane, on June 17, 2017. Her adjusted basis for the stock was $10,000. No gift taxes were paid on the transfer. Jane had purchased the stock on April 1, 2012. John sold the stock on July 1, 2018, for $22,000. On July 15, 2018, John sold one-half of the Green, Inc. stock for $80,000. John was notified on August 1, 2018, that Yellow, Inc. stock he purchased from Yellow, Inc. as their first investor on September 1, 2017, for $150,000 had become worthless. While he perceived that the investment was risky, he did not anticipate that the corporation would declare bankruptcy.

On August 15, 2018, John received a parcel of land in Phoenix worth $230,000 in exchange for a parcel of land he owned in Tucson. Because the Tucson parcel was worth $245,000, he also received $15,000 cash. John’s adjusted basis for the Tucson parcel was $180,000. He originally purchased it on September 18, 2013.

On December 31, 2018, John sold the condominium in which he had been living for the past 15 years (In Tustin). He will move into another home in 2019. The sales price was $1,000,000, selling expenses were $100,000 (including commissions). John purchased the condominium for $290,000.

Assume John contributes to a SEP IRA. You need to consult with John and let him know how much he can contribute to his SEP IRA assuming he files his return by April 15, 2019. Include the maximum eligible amount he can contribute to the SEP IRA in his return based on his income from his business.

John’s broker advised him to invest $50,000 on January 1, 2018. John’s Share of the Ordinary Loss for 2018 from We Drill Oil LLC per his K-1 (taxed as a partnership
for tax purposes) was $55,000.

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