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Problem 12-26 (Algorithmic) (LO. 6, 7) On January 1, 2022, Kinney, Inc., an S corporation, reports $19,200 of accumulated E & P and a balance of $48,000 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 $24,000. Kinney distributes $28,800 to each shareholder on July 1, and it distributes another $14,400 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 $ X dividend income for the July 1 distribution and $ 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 X distribution from AAA.

Problem 12-26 (Algorithmic) (LO. 6, 7) On January 1, 2022, Kinney, Inc., an S corporation, reports $19,200 of accumulated E & P and a balance of $48,000 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 $24,000. Kinney distributes $28,800 to each shareholder on July 1, and it distributes another $14,400 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 $ X dividend income for the July 1 distribution and $ 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 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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Problem 12-26 (Algorithmic) (LO. 6, 7) On January 1, 2022, Kinney, Inc., an S corporation, reports $19,200 of accumulated E & P and a balance of $48,000 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 $24,000. Kinney distributes $28,800 to each shareholder on July 1, and it distributes another $14,400 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 $ X dividend income for the July 1 distribution and $ 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 X distribution from AAA.
Transcribed Image Text:Problem 12-26 (Algorithmic) (LO. 6, 7) On January 1, 2022, Kinney, Inc., an S corporation, reports $19,200 of accumulated E & P and a balance of $48,000 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 $24,000. Kinney distributes $28,800 to each shareholder on July 1, and it distributes another $14,400 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 $ X dividend income for the July 1 distribution and $ 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 X distribution from AAA.
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