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McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick
Edition 3ISBN: 9780077924522McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick
Edition 3ISBN: 9780077924522 Exercise 24
Assume the following year 2 income statement for Johnstone Corporation, which was a C corporation in year 1 and elected to be taxed as an S corporation beginning in year 2. Johnstone's earnings and profits at the end of year 1 were $10,000. Marcus is Johnstone's sole shareholder. What is Johnstone's accumulated adjustments account at the end of year 2, and what amount of dividend income does Marcus recognize on the year 2 distribution in each of the following alternative scenarios
a. Johnstone distributed $6,000 to Marcus in year 2.b. Johnstone distributed $10,000 to Marcus in year 2.c. Johnstone distributed $16,000 to Marcus in year 2.d. Johnstone distributed $26,000 to Marcus in year 2.
a. Johnstone distributed $6,000 to Marcus in year 2.b. Johnstone distributed $10,000 to Marcus in year 2.c. Johnstone distributed $16,000 to Marcus in year 2.d. Johnstone distributed $26,000 to Marcus in year 2.
Explanation
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When a C Corporation is converted to an ...
McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick
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