Winkin, Blinkin, and Nod are equal shareholders in SleepEZ, an S corporation. In
ID: 2570950 • Letter: W
Question
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 2017 under both the daily allocation and the specific identification allocation method? Refer to the following table for the timing of SleepEZ’s income.
(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.
Income Reported
Daily Allocation Method Specific Identification Method
Winkin __________ ___________
Blinkin ___________ ____________
Nod ___________ ____________
b. On May 29, 2017, Blinkin sells his shares to Nod.
Income Reported
Daily Allocation Method Specific Identification Method
Winkin __________ ___________
Blinkin ___________ ____________
Nod ___________ ____________
c. On May 29, 2017, Winkin and Nod each sell their shares to Blinkin.
Income Reported
Daily Allocation Method Specific Identification Method
Winkin __________ ___________
Blinkin ___________ ____________
Nod ___________ ____________
Period Income January 1 through May 29 (149 days) $ 167,000 May 30 through December 31 (216 days) 441,000 January 1 through December 31, 2017 (365 days) $ 608,000Explanation / Answer
a. There are no sales of SleepEZ stock during the year.
Daily Allocation Method
Winkin 202667 ((1/3*365/365*608000))
Blinkin 202667 ((1/3*365/365*608000))
Nod 202667 ((1/3*365/365*608000))
Specific Identification Method
Winkin 202667 (608000/3)
Blinkin 202667 (608000/3)
Nod 202667 (608000/3)
b. On May 29, 2017, Blinkin sells his shares to Nod.
Daily Allocation Method
Winkin 202667 ((1/3*365/365*608000))
Blinkin 82732 (1/3*149/365*608000)
Nod 322601 (1/3*365/365*608000)+(1/3*216/365*608000)
Specific Identification Method
Winkin 202667(1/3*167000)+(1/3*441000)
Blinkin 55667 (1/3*167000)+(0/3*441000)
Nod 349667 (1/3*167000)+(2/3*441000)
c. On May 29, 2017, Winkin and Nod each sell their shares to Blinkin.
Daily Allocation Method
Winkin 82732 (1/3*149/365*608000)
Blinkin 82732 (1/3*149/365*608000)
Nod 442535 (1/3*149/365*608000)+(3/3*216/365*608000)
Specific Identification Method
Winkin 55667 (1/3*167000)
Blinkin 55667 (1/3*167000)
Nod 446667 (1/3*167000)+(3/3*441000)
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