On January $1,2024,$ Kinney, Inc., an S corporation, reports $$5,600$ of accumulated E & P and a balance of $$14,000$ in AAA. Kinney has two shareholders, Erin and Frank, each of whom owns $500$ shares of Kinney's stock. Kinney's nonseparately stated ordinary income for the year is $$7,000.$ Kinney distributes $$8,400$ to each shareholder on July $1,$ and it distributes another $$4,200$ to each shareholder on December $21.$ How are the shareholders taxed on the distributions? Ignore the $20\%$ QBI deduction. Do not round intermediate computations. If required, round your final answers to the nearest dollar. Erin and Frank each report $fill in the blank $1$dividend income for the July $1$ distribution and $fill in the blank $2$ each for the December $21$ distribution. Assuming that the shareholders have sufficient basis in their stock, Erin and Frank each receive a tax$-$freetaxabletax$-$free $fill in the blank $4$distribution from AAA. Problem $11-26($Aporithmic$)($L$.$O$.6,7)$

On January $1,2024,$ Kinney, Inci, an S corporation, reports $\backslash (\backslash$$ $5,600\backslash )$ of accumulated E $\backslash$& P and a balance of $\backslash (\backslash$$ $14,000\backslash )$ in AAA, Kinney has two shareholders, Erit and Frank, each of whom twns $500$ shares of Kinney's stock. Kinney's nonseparately stated ordizary Income for the Year$\backslash (\backslash$$ $7,000\backslash )$;

Knney distributes $\backslash (\backslash$$ $8,400\backslash )$ to each shareholder on July $1,$ and it distributes another $\backslash (\backslash$$ $4,200\backslash )$ to each shareholder on December $21.$ How are the shareholders taxed on the distributions? Ignore the $\backslash (20\backslash \%\backslash )$ QBI deduction.

Do not round intermediate computations. If required, round vour final answers to the nearest dollar.

Erin and Frank each reports X dividend income for the July $1$ distribution and $\backslash (\backslash$$ $\backslash )\backslash ($ x $\backslash )$ each for the December $2$ z distribution. Assuining that the shareholders have sufficient basls in thieit stock, Erin and Frank each receive a

$\backslash (\backslash$sqrt$\{3\}\backslash )3$ X distribution from ABA.

Fiestoack:

Sheck My Won

The amount of any distribution to an $\backslash ($ S$^\{\backslash$prime$\}\backslash )$ corporation shareholder is equal to the cash plus the fair market value of any other property distributed. How the distribution is taxed depends upin whether the $\backslash ($ S $\backslash )$ corporation has $\backslash ($ C $\backslash )$ corporation accumulated eamings and profits $($AEP$),$ The AAA provides a mechanism to ensure that the earnings of an $\backslash ($ S $\backslash )$ corporation are taxed to shareholders only once.