On January 1, 2022, Kinney, Inc., an S corporation, reports $32,800 of accumulated E & P and a balance of $82,000 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 $41,000. Kinney distributes $49,200 to each shareholder on July 1, and it distributes another $24,600 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 $ 8,200 ✓ dividend income for the July 1 distribution and 41,000 X each for the December 21 distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax-free X distribution from AAA. ✓ $ 24,600
On January 1, 2022, Kinney, Inc., an S corporation, reports $32,800 of accumulated E & P and a balance of $82,000 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 $41,000. Kinney distributes $49,200 to each shareholder on July 1, and it distributes another $24,600 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 $ 8,200 ✓ dividend income for the July 1 distribution and 41,000 X each for the December 21 distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax-free X distribution from AAA. ✓ $ 24,600
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 22CE
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Transcribed Image Text:On January 1, 2022, Kinney, Inc., an S corporation, reports $32,800 of accumulated E & P and a balance of $82,000 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 $41,000.
Kinney distributes $49,200 to each shareholder on July 1, and it distributes another $24,600 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 $
8,200✔ dividend income for the July 1 distribution and $ 41,000 X each for the
December 21 distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a
tax-free
24,600 X distribution from AAA.
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