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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.

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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

ekkarill92 answered 3 years ago
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