Money, Inc., a calendar year S corporation in Denton, Texas, has two unrelated shareholders, each owning 50% of the stock. Both shareholder record a $400,000 stock basis as of January 1. At the beginning of the tax year, Money reports balances in AAA of $300,000 and AEP of $600,000. During the year, Money generates operating income of $100,000. At the end of the year, Money distributes securities worth $1,000,000, with an adjusted basis of $800,000. The two shareholders consent to an AAA bypass election. What is the Federal income tax effects of these transactions for the shareholders? If an amount is zero, enter "0". Each shareholder receives a $fill in the blank 1 taxable distribution and a $fill in the blank 2 tax-free distribution from AAA. The AAA is $fill in the blank 3 at the end of the year, and each shareholder's basis is $fill in the blank 4 . AEP is reduced to $fill in the blank 5
Money, Inc., a calendar year S corporation in Denton, Texas, has two unrelated shareholders, each owning 50% of the stock. Both shareholder record a $400,000 stock basis as of January 1. At the beginning of the tax year, Money reports balances in AAA of $300,000 and AEP of $600,000. During the year, Money generates operating income of $100,000. At the end of the year, Money distributes securities worth $1,000,000, with an adjusted basis of $800,000. The two shareholders consent to an AAA bypass election. What is the Federal income tax effects of these transactions for the shareholders? If an amount is zero, enter "0". Each shareholder receives a $fill in the blank 1 taxable distribution and a $fill in the blank 2 tax-free distribution from AAA. The AAA is $fill in the blank 3 at the end of the year, and each shareholder's basis is $fill in the blank 4 . AEP is reduced to $fill in the blank 5
Chapter12: S Corporations
Section: Chapter Questions
Problem 36P
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Money, Inc., a calendar year S corporation in Denton, Texas, has two unrelated shareholders, each owning 50% of the stock. Both shareholder record a $400,000 stock basis as of January 1. At the beginning of the tax year, Money reports balances in AAA of $300,000 and AEP of $600,000. During the year, Money generates operating income of $100,000. At the end of the year, Money distributes securities worth $1,000,000, with an adjusted basis of $800,000. The two shareholders consent to an AAA bypass election. What is the Federal income tax effects of these transactions for the shareholders? If an amount is zero, enter "0". Each shareholder receives a $fill in the blank 1 taxable distribution and a $fill in the blank 2 tax-free distribution from AAA. The AAA is $fill in the blank 3 at the end of the year, and each shareholder's basis is $fill in the blank 4 . AEP is reduced to $fill in the blank 5
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