Assume Joe Harry sells his 25 percent interest in Joe's S Corp., Inc., to Tyrone on January 29.Using the specific identification allocation method, how much income does Joe Harry report if Joe's S Corp., Inc., earned $200,000 from January 1 to January 29 and a total of $1,460,000 from January 1 through December 31 (365 days)?

Question

Quizplus · Accepted Answer

Joe Harry reports income based on his 25% share of the income earned while he was a shareholder. From January 1 to January 29, the S Corp earned $200,000. Joe's share is 25% of $200,000, which is $50,000.

Assume Joe Harry Sells His 25 Percent Interest in Joe's