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On January 1, 2022, Kinney, Inc., an S corporation, reports $32,800 of accumulated E & P and a balance of $82,000 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 $41,000. Kinney distributes $49,200 to each shareholder on July 1, and it distributes another $24,600 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 $ 41,000 X each for the 8,200✔ dividend income for the July 1 distribution and December 21 distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax-free 24,600 X distribution from AAA.

On January 1, 2022, Kinney, Inc., an S corporation, reports $32,800 of accumulated E & P and a balance of $82,000 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 $41,000. Kinney distributes $49,200 to each shareholder on July 1, and it distributes another $24,600 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 $ 41,000 X each for the 8,200✔ dividend income for the July 1 distribution and December 21 distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax-free 24,600 X distribution from AAA.

FINANCIAL ACCOUNTING
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, 2022, Kinney, Inc., an S corporation, reports $32,800 of accumulated E & P and a balance of $82,000 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 $41,000. Kinney distributes $49,200 to each shareholder on July 1, and it distributes another $24,600 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 $ 8,200✔ dividend income for the July 1 distribution and $ 41,000 X each for the December 21 distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax-free 24,600 X distribution from AAA.
Transcribed Image Text:On January 1, 2022, Kinney, Inc., an S corporation, reports $32,800 of accumulated E & P and a balance of $82,000 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 $41,000. Kinney distributes $49,200 to each shareholder on July 1, and it distributes another $24,600 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 $ 8,200✔ dividend income for the July 1 distribution and $ 41,000 X each for the December 21 distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax-free 24,600 X distribution from AAA.
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