ABC was formed as a calendar-year S corporation with Alan, Brenda, and Conner as equal shareholders. On May 1, 2019, 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 2019 as follows: (Assume that there are 365 days in the year.)PeriodIncomeJanuary 1 through April 30 (120 days)$200,000May 1 through December 31 (245 days)530,000January 1 through December 31$730,000 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 2019?
What will be an ideal response?
S corporation short tax year = $240,000 ($730,000/365 days × 120 days).
C corporation short tax year = $490,000 ($730,000/365 days × 245 days).
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