Question

Towne, Inc., a calendar year S corporation, holds AAA of $627,050 at the beginning of the tax year. 2018 During the year, the following items occur.

Sales income	$216,000
Loss from real estate operations	(4,000)
Officers’ life insurance proceeds	100,000
Premiums paid for officers’ life insurance	(3,600)
Dividend income	17,000
Interest income	3,000
Charitable contributions	(22,000)
§ 179 depreciation expense	(2,500)
Administrative expenses	(35,000)
Cash distributions to shareholders	(73,220)

Calculate Towne’s ending AAA balance.

Answer 1

Ans. Calculation of Towne's ending AAA Balance

Particulars	Amount
Beginning AAA	$627,050
Add:-
Sales Income	$216,000
Dividend Income	$17,000
Interest Income	$3,000
Less:-
Real Estate Loss	($4,000)
Charitable Contributions	($22,000)
§ 179 Depreciation Expenses	($2,500)
Administrative Expenses	($35,000)
Less:- Cash Distributions	($73,220)
Ending AAA	$726,330