Problem 11-79 S Corporation Tax Return.

Problem 11-79

S Corporation Tax Return. John Forsythe (SSN 555-55-5555) began a custom cabinet manufacturing business, John's Cabinets (EIN 86-1122334 and Business Code 321000), four years ago as of July 1 of the current tax year. John incorporated the business, and the corporation made a timely election to be taxed as an S corporation. The business has been highly successful, but to bring in additional capital for expansion, it sold 10,000 shares of previously unissued stock to John's friend, Tom Jones (SSN 666-66-6666), on March 1 of the current year for $80,000. John continues to hold his original 15,000 shares that were issued at incorporation for his contribution of money and property valued at $120,000.