Problem $12-26($Algorithmic$)($Lo$.6,7)$

On January $1,2022,$ Kinney, Inc., an S corporation, reports $$33,600$ of accumulated E & P and a balance

of $$84,000$ 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 $$42,000.$

Kinney distributes $$50,400$ to each shareholder on July $1,$ and it distributes another $$25,200$ 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 $ dividend income for the July $1$ distribution and $

each for the December $21$ distribution. Assuming that the shareholders have sufficient

basis in their stock, Erin and Frank each receive a

distribution from

AAA.