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 each for the December 21 distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax-free distribution from AAA.

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 each for the December 21 distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax-free distribution from AAA.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

ABC was formed as a calendar-year S corporation with Alan, Brenda, and Conner as equal shareholders. On May 1, 2020, ABC's S election was terminated after Conner sold his ABC shares (one-third of all shares) to his solely owned C corporation, Conner, Incorporated ABC reported business income for 2020 as follows: (Assume that there are 365 days in the year.) Period Income January 1 through April 30 (120 days) $ 203,285 May 1 through December 31 (245 days) 533,285 January 1 through December 31 $ 736,570 If ABC uses the daily method of allocating income between the S corporation short tax year (January 1–April 30) and the C corporation short tax year (May 1–December 31), how much income will it report on its S corporation short tax year return and its C corporation short tax year return for 2020? Essay Toolbar navigation opens in a dialog
Saxon Company is a CCPC that began operations on January 1, 2019. It has adopted a December 31 year end. During 2019, the Company received eligible dividends of $45,000 and designated $40,000 of the dividends it paid as eligible. On December 31, 2019, the balance in the Company's GRIP account was $45,000. For 2020, Saxon has Taxable Income of $726,000. Included in this amount is $18,000 of interest income, taxable capital gains of $22,000, and the deduction of a net capital loss of $18,000. Also during that year, the Company received eligible dividends of $36,000. In determining the 2020 Tax Payable, the Company has a small business deduction of $66,500. During 2020, Saxon pays dividends of $48,000, with $21,000 of this amount being designated as eligible. Required: Determine the Company's GRIP balance at the end of 2020.
You’re a 40% shareholder of ABC, Inc., an S corporation. ABC’s ordinary busi-ness income for 2019 was exactly $100,000. ABC distributed $20,000 to you in your capacity as a shareholder during 2019. On your 2019 Form 1040, you will report ___ of gross income from ABC. Why is that the correct amount plzzz ans asap.....
Candlewood LLC started business on September 1, 2020 and adopted a calendar year. During 2021, Candlewood incurred $6,500 in legal fees for drafting the LLC's operating agreement and $3,000 in accounting fees for tax advice of an organizational nature, for a total of $9,500 of organizational costs. Candlewood also incurred $30,000 of preopening advertising expenses and $24,500 of salaries and training costs for new employees before opening for business, for a total of $54,500 of startup costs. The LLC wants to take the largest deduction available for these costs. If required, round any division to five decimal places and use in subsequent computations. Round your final answers to the nearest dollar. In 2020, the LLC may deduct $fill in the blank 1 as organizational expenses and $fill in the blank 2 as startup expenses.
Marvel Media, LLC, has three members: WLKT Partners, Madison Sanders, and Observer Newspaper, LLC. On January 1, 20Y2, the three members had equity of $200,000, $40,000,and $160,000, respectively. WLKT Partners contributed an additional $50,000 to Marvel Media, LLC, on June 1, 20Y2. Madison Sanders received an annual salary allowance of $55,000 during 20Y2. The members’ equity accounts are also credited with 10% intereston each member’s January 1 capital balance. Any remaining income is to be shared in the ratio of 4:3:3 among the three members. The revenues, expenses, and net income for Marvel Media, LLC, for 20Y2 were $1,260,000, $900,000, and $360,000, respectively. Amounts equal to the salary and interest allowances were withdrawn by the members.a. Determine the division of income among the three members.b. Prepare the journal entry to close the revenues, expenses, and withdrawals to the individual member equity accounts.c. Prepare a statement of members’ equity for 20Y2.d. What…
In 2021, ACME Corporation (a C corporation) had operating income of $250,000. ACME sold investments that resulted in a $120,000 short-term capital gain and a $200,000 long-term capital loss. ACME received a dividend of $100,000 from Andiron, Inc. ACME owns 5% of Andiron stock. In 2020, ACME had taxable income of $100,000 (which included $20,000 of LTCG). In 2017, 2018, and 2019, ACME did not have any capital transactions. Determine ACME's taxable income for 2021. Determine Acme's tax liability for 2021. Assume that ACME is a client. Explain what the client can expect in terms of the overall tax liability in 2021.
On January 1, 2019, Halstead, Inc., purchased 83,000 shares of Sedgwick Company common stock for $1,529,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired was attributed solely to goodwill. Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period. Net Income Annual Cash Dividends (paid quarterly) 2019 $357,000 $124,000 2020 399,000 144,000 2021 601,000 177,000 On July 1, 2021, Halstead sells 13,280 shares of this investment for $23 per share, thus reducing its interest from 25 to 21 percent, but maintaining its significant influence. Determine the amounts that would appear on Halstead’s 2021 income statement relating to its ownership and partial sale of its investment in Sedgwick’s common stock. (Round your intermediate calculations to the…
Sagar
Cramer Corporation, a calendar year, accrual basis corporation, reported $1.25 million of net income after tax on its 2020 financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: . . Cramer's federal income tax expense per books was $205,000. Cramer's book income included $15,000 of dividends received from a domestic corporation in which Cramer owns a 25 percent stock interest, and $6,500 of dividends from a domestic corporation in which Cramer owns a 5 percent stock interest. Cramer recognized $15,000 of capital losses this year and no capital gains. . . Cramer recorded $10,600 of book expense for meals and $12.500 of book expense for entertainment costs. . Cramer's depreciation expense for book purposes totaled $405,000. MACRS depreciation was $475,000. Required: a. Compute Cramer's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Cramer's book and taxable…
On January 1, 2019, Halstead, Inc., purchased 76,000 shares of Sedgwick Company common stock for $1,527,000, giving Halstead 25 percent ownership and the ability to apply significant influence over Sedgwick. Any excess of cost over book value acquired was attributed solely to goodwill. Sedgwick reports net income and dividends as follows. These amounts are assumed to have occurred evenly throughout these years. Dividends are declared and paid in the same period. Annual Cash Dividends (paid quarterly) $104,000 Net Income $417,000 571,000 613,000 2019 2020 141,000 2021 156,000 On July 1, 2021, Halstead sells 12,160 shares of this investment for $29 per share, thus reducing its interest from 25 to 21 percent, but maintaining its significant influence. Determine the amounts that would appear on Halstead's 2021 income statement relating to its ownership and partial sale of its investment in Sedgwick's common stock. (Round your intermediate calculations to the nearest whole number.) As total…
4
During the year, Miles Nutt, the sole shareholder of a calendar year S corporation, received a distribution of $16,000. At the end of last year, his stock basis was $4,000. The corporation earned $11,000 ordinary income during the year. It has no accumulated E & P. Which statement is correct? a. Nutt recognizes a $1,000 LTCG. b. Nutt's stock basis is $2,000. c. Nutt's ordinary income is $15,000. d. Nutt's tax-free return of capital is $11,000.'