Grams,Inc. ,a calendar year S corporation is a manufacturer of widgets.Grams reports $20,000 DPGR and $15,000 of wages;its S corporation's QPAI is $5,000.Janet owns a 40% interest in the S corporation.All expenses that reduce DPGR are from wages,and all wages paid relate to DPGR.How much QPAI and wages are allocated to Janet?

Question

Quizplus · Accepted Answer

To calculate the amount of QPAI allocated to Janet, we need to start with the S corporation's QPAI of $5,000 and multiply it by Janet's percentage of ownership (40%). 
QPAI allocated to Janet = $5,000 x 40% = $2,000

To calculate the amount of wages allocated to Janet, we need to start with the total wages paid by the S corporation (which relate to DPGR only) and multiply it by Janet's percentage of ownership. 
Wages allocated to Janet = $15,000 x 40% = $6,000

Therefore, the correct answer is B.

Grams,Inc ,A Calendar Year S Corporation Is a Manufacturer of Widgets.Grams