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29 January, 05:57

As of January 1 of the current year, Kane owned all the 100 issued shares of Manning Corp., a calendar

year S corporation. On the 41st day of the year, Kane sold 25 of the Manning shares to Rodgers. For the

current year ended December 31 (a 365-day calendar year), Manning had $73,000 in nonseparately

stated income and made no distributions to its shareholders. What amount of nonseparately stated

income from Manning should be reported on Kane's current year tax return?

A. $56,750

B. $54,750

C. $16,250

D. $0

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Answers (1)
  1. 29 January, 08:30
    0
    A) $56,750

    Explanation:

    Since Manning's ownership changed during the year, it must allocate income differently for the first 40 days than the remaining 325.

    Kane should report the following income:

    100% income form Manning x 40/365 = $73,000 x 40/365 = $8,000 75% income from Manning x 325/365 = $73,000 x 75% x 325/365 = $48,750 total income allocated to Kane = $8,000 + $48,750 = $56,750
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Home » Business » As of January 1 of the current year, Kane owned all the 100 issued shares of Manning Corp., a calendar year S corporation. On the 41st day of the year, Kane sold 25 of the Manning shares to Rodgers.
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