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Lecture 27

MGMT 133 Lecture Notes - Lecture 27: S Corporation, Ordinary IncomeExam


Department
Management
Course Code
MGMT 133
Professor
Theresa Aberle
Lecture
27

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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 2018 under both the daily
allocation and the specific identification allocation method? Refer to the following table for the
timing of SleepEZ’s income.
Period
Income
January 1 through April 15 (105 days)
$
162,00
0
April 16 through December 31 (260 days)
396,00
0
January 1 through December 31, 2018
(365 days)
$
558,00
0
a. There are no sales of SleepEZ stock during the year.
558k/3 = 186k
b. On April 15, 2018, Blinkin sells his shares to Nod.
c. On April 15, 2018, Winkin and Nod each sell their shares to Blinkin.
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