In: Accounting
Winkin, Blinkin, and Nod are equal shareholders in SleepEZ, an S corporation. In the conditions listed below, how much income should each report from SleepEZ for 2021 under both the daily allocation and the specific identification allocation methods? Refer to the following table for the timing of SleepEZ’s income.
January 1 through February 18 (48 days)$209,000February 19 through December 31 (317 days) 424,000January 1 through December 31, 2021 (365 days)$633,000
a. There are no sales of SleepEZ stock during the year.
b. On February 18, 2021, Blinkin sells his shares to Nod.
c. On February 18, 2021, Winkin and Nod each sell their shares to Blinkin.