How are the shareholders taxed on the distributions

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Reference no: EM131192531

On January 1, 2015, Kinney, Inc., an S Corporation, reports $4,000 of accumulated E&P and a balance of $10,000 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 if $5,000.

Kinney distributes $6,000 to each shareholder on July 1, and it distributes another $3,000 to each shareholder on December 21. How are the shareholders taxed on the distributions?

Reference no: EM131192531

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