ABC Was Formed as a Calendar-Year S Corporation with Alan

question 39

Essay

ABC was formed as a calendar-year S corporation with Alan, Brenda and Conner as equal shareholders. On May 1, 2014, ABC's S election was terminated after Conner sold his ABC shares (one-third of all shares) to his solely owned C corporation Conner, Inc. ABC reported business income for 2014 as follows (assume that there are 365 days in the year): $$\begin{array} { | l | r | } \hline { \text { Period } } & { \text { Income } } \\\hline \text { January 1 through April 30 (120 days) } & \$ 200,000 \\\hline \text { May 1 through December 31 (245 days) } & 530,000 \\\hline \text { January 1 through December 31 } & \$ 730,000 \\\hline\end{array}$$ If ABC uses the daily method of allocating income between the S corporation short tax year (January 1 - April 30) and the C corporation short tax year (May 1 - December 31), how much income will it report on its S corporation short tax year return and its C corporation short tax year return for 2014?

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Definitions:

Visual Illusions

Perceptual experiences where the visual perception of an object or scene diverges significantly from reality, often exploring the nature of human visual perception.

Door-In-The-Face Technique

A persuasion strategy that involves making a large request that is expected to be refused in order to make a smaller request seem more reasonable.

Frugal

Characterized by thriftiness and economical use of resources, avoiding waste and unnecessary expense.

Absolute Threshold

The minimum intensity of stimulation required to produce a sensory experience or for a stimulus to be detected 50% of the time.