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% QBI deduction. Do not round intermediate computations. If required, round your 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 $ distribution from AAA.

Expert Solution

ekkarill92 answered 2 years ago

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