ed Fruit Corp. stock is owned one-third by Raisin and two-thirds by Prune. All ders are US resident citizen individuals. At the beginning of the current year, Raisin's his shares was $54,000 and Prune's basis in her shares was $18,000. During the ear, Dried Fruit Corp. earned $324,000 of net income from operations. Raisin's share 3,000; Prune's share was $216,000. On December 31st, Dried Fruit Corp. distributes e (real property) having a fair market value of $108,000, and a basis of $72,000, to

ed Fruit Corp. stock is owned one-third by Raisin and two-thirds by Prune. All ders are US resident citizen individuals. At the beginning of the current year, Raisin's his shares was $54,000 and Prune's basis in her shares was $18,000. During the ear, Dried Fruit Corp. earned $324,000 of net income from operations. Raisin's share 3,000; Prune's share was $216,000. On December 31st, Dried Fruit Corp. distributes e (real property) having a fair market value of $108,000, and a basis of $72,000, to

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2023, Kinney, Inc., an S corporation, reports $33,600 of accumulated E & P and a balance of $84,000 in AAA. Kinney has two shareholders, Erin and Frank, each of whom owns 500 shares of Kinney's stock. Kinney's nonseparately stated ordinary income for the year is $42,000. Kinney distributes $50,400 to each shareholder on July 1, and it distributes another $25,200 to each shareholder on December 21. How are the shareholders taxed on the distributions? Ignore the 20% QBI deduction. Do not round intermediate computations. If required, round your final answers to the nearest dollar. Erin and Frank each report $ dividend income for the July 1 distribution and $ distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax-free distribution from AAA. $ each for the December 21
Sharon Slotten purchased shares in ATCO Ltd. during the current year as follows: Jan. 1: 200 shares for $25 per share April 2: 300 shares for $30 per share July 1: 100 shares sold for $45 per share Sept. 8: 500 shares for $24 per share On December 22, of the current year Sharon sells 200 ATCO Ltd. shares for $35 per share and pays $100 in sales commission. Required: Calculate the taxable capital gain or loss included in Sharon's NET INCOME under paragraph 3(b) of the Income Tax Act. Solution: Date No. of shares Cost per share Cost in Pool Jan.1 200 $ 25.00 $ 5,000 Apr.2 300 $ 30.00 $ 9,000 Subtotal 01-Jul 100 $ 45.00 $ 4,500 Sept.8 Total Calculation of Capital Gain: Proceeds of disposition Selling costs Adjusted cost base Capital Gain (loss) Capital Gains reserve Capital Gain Inclusion rate Taxable capital gain Total 01-Jul Dec.22 $ 200 $
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