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Unformatted text preview: ning's S corporation income to be
allocated between the shareholders on a per-share, per-day basis. The first 40 days' income is allocated
100% to Kane: 40 × ($73,000/365) = $8,000. 75% of the remaining 325 days' income is allocated to
Kane: 75% × 325 × ($73,000/365) = $48,750. The total income allocated to Kane is $56,750, ($8,000 +
Choice "b" is incorrect. Manning's income will be allocated on a per-share, per-day basis; although Kane
owned 75% of the shares starting on April 1, he owned 100% of the shares through March 31.
Choice "c" is incorrect. This is the income that should be allocated to Rodgers; the question asks how
much should be allocated to Kane.
Choice "d" is incorrect. The mid-year change of ownership causes Manning's S corporation income to be
allocated between the shareholders on a per-share, per-day basis. CPA-01976 Type1 M/C A-D 88. CPA-01976 ARE May 94 #21 Corr Ans: C PM#12 R 3-02 Page 53 An S corporation has 30,000 shares of voting common stock and 20,000 shares of non-voting common
stock issued and outstanding. The S election can be revoked voluntarily with the...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.
- Fall '10
- The Land