Winkin, Blinkin, and Nod are equal shareholders in SleepEZ, an S corporation. In the conditions listed...
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 1 (91 days) $ 188,000 April 2 through December 31 (274 days) 361,000 January 1 through December 31, 2018 (365 days) $ 549,000 (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.) a. There are no sales of SleepEZ stock during the year. b. On April 1, 2018, Blinkin sells his shares to Nod. c. On April 1, 2018, Winkin and Nod each sell their shares to Blinkin.
Homework Answers
| since there is no change of ownership both methods | |||||||||
| will yield same result | |||||||||
| so 549,000*1/3 | |||||||||
| 183000 | |||||||||
| Daily allocation | Specific identification | ||||||||
| method | method | ||||||||
| Winkin | 183,000 | 183,000 | |||||||
| Blinkin | 183,000 | 183,000 | |||||||
| Nod | 183,000 | 183,000 | |||||||
| b) | Daily allocation method | ||||||||
| Winkin (549,000*365/365*1/3)=183,000 | |||||||||
| Blinkin (549000*91/365*1/3)= | 45625 | ||||||||
| Nod (549000*365/365*1/3 )+(549000*274/365*1/3)= | 320375 | ||||||||
| Specific identification method | |||||||||
| Winkin (188000*1/3)+(361000*1/3)= | 182000 | ||||||||
| Blinkin (188000*1/3)+(361000*0/3)= | 62667 | ||||||||
| Nod (188000*1/3)+(361000*2/3)= | 303333 | ||||||||
| Daily allocation | Specific identification | ||||||||
| method | method | ||||||||
| Winkin | 183,000 |
182,000 |
|||||||
| Blinkin | 45,625 | 62,667 | |||||||
| Nod | 320,375 | 303,333 | |||||||
| c) | Daily allocation method | ||||||||
| Winkin (549000*91/365*1/3)= | 45625 | ||||||||
| Blinkin(549000*91/365*1/3)+(549000*274/365*3/3)= | 457751 | ||||||||
| Nod (549000*91/365*1/3) | 45625 | ||||||||
| Specific identification method | |||||||||
| Winkin (188000*1/3)= | 62666.66 | ||||||||
| Blinkin (188000*1/3)+(361000*3/3)= |
423666.66 |
||||||||
| Nod (188000*1/3)= | 62666.66 | ||||||||
| Daily allocation | Specific identification | ||||||||
| method | method | ||||||||
| Winkin | 45,625 | 62,667 | |||||||
| Blinkin | 457,751 | 423,667 | |||||||
| Nod | 45,625 | 62,667 | |||||||
| (due to rounding there is difference of 1 , please check where you need to | |||||||||
| adjust the differecnce, I have provided the answer with full explanation | |||||||||
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Winkin, Blinkin, and Nod are equal shareholders in SleepEZ, an S
corporation. In the conditions listed...
Winkin, Blinkin, and Nod are equal shareholders in SleepEZ, an S corporation. In the conditions listed...
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