On January 1, 2019, Kinney, Inc., an S corporation, reports $4,000 of accumulated E & P...

On January 1, 2019, Kinney, Inc., an S corporation, reports $4,000 of accumulated E & P and a balance of $10,000 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 $5,000.

Kinney distributes $6,000 to each shareholder on July 1, and it distributes another $3,000 to each shareholder on December 21.

How are the shareholders taxed on the distributions? Ignore the 20% QBID.

Round any division to five decimal places. If required, round final answers to the nearest dollar.

Erin and Frank each report $___________ dividend income for the July 1 distribution and $_____________ each for the December 21 distribution. Assuming that the shareholders have sufficient basis in their stock, both Erin and Frank each receive a tax-free $ 7,500 distribution from AAA.

Expert Solution

ekkarill92 answered 2 years ago

On January 1, 2019, Kinney, Inc., an S corporation, reports $14,400 of accumulated E & P...

On January 1, 2019, Kinney, Inc., an S corporation, reports $14,400 of accumulated E & P and a balance of $36,000 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 $18,000. Kinney distributes $21,600 to each shareholder on July 1, and it distributes another $10,800 to each shareholder on December 21. How are the shareholders taxed on the distributions? Ignore the 20%...

Problem 12-28 (Algorithmic) (LO. 6) On January 1, 2017, Kinney, Inc., an S corporation, reports $34,400...

Problem 12-28 (Algorithmic) (LO. 6) On January 1, 2017, Kinney, Inc., an S corporation, reports $34,400 of accumulated E & P and a balance of $86,000 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 $43,000. Kinney distributes $51,600 to each shareholder on July 1, and it distributes another $25,800 to each shareholder on December 21. How are the shareholders taxed on...

11. On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of...

11. On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of $300,000. Its current E & P for the year is $90,000 (before considering dividend distributions). During the year, Tulip distributes $600,000 ($300,000 each) to its equal shareholders, Anne and Tom. Anne has a basis in her stock of $65,000, and Tom’s basis is $120,000. What is the effect of the distribution by Tulip Corporation on Anne and Tom?

On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of $400,000....

On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of $400,000. Its current E & P for the year is $120,000 (before considering dividend distributions). On the last day of the year, Tulip distributes $600,000 ($150,000 each) to its four equal shareholders, Anne, Andrew, Tom and Terry. Anne has a basis in her stock of $65,000, while Andrew’s basis is $120,000. Tom has a $5,000 basis in his stick while Terry has a $80,000 basis....

This year, Sooner Company reports a deficit in current E&P of ($362,000). Its accumulated E&P at...

This year, Sooner Company reports a deficit in current E&P of ($362,000). Its accumulated E&P at the beginning of the year was $270,000. Sooner distributed $540,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock before the distribution is $101,500. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a) How much of the $540,000 distribution is treated as a dividend to...

This year, Sooner Company reports a deficit in current E&P of ($478,000). Its accumulated E&P at...

This year, Sooner Company reports a deficit in current E&P of ($478,000). Its accumulated E&P at the beginning of the year was $392,000. Sooner distributed $784,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock before the distribution is $120,000. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) c. What is Sooner’s balance in accumulated E&P on the first day of...

This year, Sooner Company reports current E&P of negative $426,000. Its accumulated E&P at the beginning...

This year, Sooner Company reports current E&P of negative $426,000. Its accumulated E&P at the beginning of the year was $264,000. Sooner distributed $528,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock is $124,500. (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.) a. How much of the $528,000 distribution is treated as a dividend to Boomer? Dividend = b. What...

This year, Sooner Company reports current E&P of negative $424,000. Its accumulated E&P at the beginning...

This year, Sooner Company reports current E&P of negative $424,000. Its accumulated E&P at the beginning of the year was $354,000. Sooner distributed $708,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock is $122,500. a. How much of the $708,000 distribution is treated as a dividend to Boomer? Dividend $142,000 b. What is Boomer’s tax basis in his Sooner stock after the distribution? Tax basis $0 c. What is...

This year, Sooner Company reports current E&P of negative $478,000. Its accumulated E&P at the beginning...

This year, Sooner Company reports current E&P of negative $478,000. Its accumulated E&P at the beginning of the year was $392,000. Sooner distributed $784,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock is $120,000. (Leave no answer blank. Enter zero if applicable. Negative amounts should be indicated by a minus sign.) a. How much of the $784,000 distribution is treated as a dividend to Boomer? b. What is Boomer’s...

Elk Company reports negative current E&P of $270,000 and positive accumulated E&P of $440,000. Elk distributed...

Elk Company reports negative current E&P of $270,000 and positive accumulated E&P of $440,000. Elk distributed $340,000 to its sole shareholder, Barney Rubble, on December 31, 20X3. Barney's tax basis in his Elk stock is $127,500. What is the tax treatment of the distribution to Barney and what is his tax basis in Elk stock after the distribution?

Question