Question
Winkin, Blinkin, and Nod are equal shareholders in SleepEZ, an S corporation. In the conditions listed below, how much income should each report from SleepEZ
Winkin, Blinkin, and Nod are equal shareholders in SleepEZ, an S corporation. In the conditions listed below, how much income should each report from SleepEZ for 2021 under both the daily allocation and the specific identification allocation methods? Refer to the following table for the timing of SleepEZs income.
| Period | Income |
|---|---|
| January 1 through February 12 (42 days) | $ 128,000 |
| February 13 through December 31 (323 days) | 362,000 |
| January 1 through December 31, 2021 (365 days) | $ 490,000 |
a. There are no sales of SleepEZ stock during the year.
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b. On February 12, 2021, Blinkin sells his shares to Nod.
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c. On February 12, 2021, Winkin and Nod each sell their shares to Blinkin.
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Management and Cost Accounting
Authors: Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan
6th edition
1292063467, 978-1292063461
