Pledge Corporation, a calendar year taxpayer, has been an S corporation for several years. Sammy and Albert each own 50% of Pledge's stock. On July 1 of the current year (assume a non-leap year), Pledge issues additional common stock to Tiny Tim Corporation for cash. Sammy, Albert, and Tiny Tim each end up owning one-third of Pledge's stock. Pledge reports ordinary income of $116,800 and a short-term capital loss of $18,250 in the current year. Eighty percent of the ordinary income and all the capital loss accrue after Tiny Tim purchases its stock. Pledge makes no distributions to its shareholders in the current year. Requirement What income and losses do Pledge, Tiny Tim, Sammy, and Albert report as a result of the current year's activities? The sale of the additional stock does not terminate the S corporation election. The income for the entire year is allocated equally to the owners Sammy, Albert, and Tiny Tim on December 31. The income earned after June 30 is taxed to Tiny Tim, Sammy and Albert as passthrough income.