Katie is a one-third owner of an S corporation. After a falling-out with the other shareholders, Katie

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Katie is a one-third owner of an S corporation. After a falling-out with the other shareholders, Katie signed an agreement early in January 2008. Under the terms of the agreement, Katie took $200,000 of her capital from the corporation and had eight months to negotiate a purchase of the stock of the other shareholders. She did not complete this task by the end of August 2008.

Thus, contrary negotiations began and on March 1, 2009, Katie sold all of her shares to the remaining shareholders for a $2.5 million gain. For how many of these months does Katie report flow-through income from the S corporation?

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Federal Tax Research

ISBN: 9780324659658

8th Edition

Authors: William A. Raabe, Gerald E. Whittenburg, Debra L. Sanders

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