Question
In: Accounting
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.
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.
Solutions
Expert Solution
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 |
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