Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of...

Question

Question

Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of the current year, Chang holds acc

business accounting

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

1. Taxable dividend income = $10,000

Accumulated E & P = $33,000

Current E & P = $46,000 (deficit)

E & P up to 30 June (half year) = $46,000 / 2 = $23,000 (deficit)Libby

Net E & P balance = $33,000 - $23,000 = $10,000

Out of the $20,000 distribution made to Libby, the amount of $10,000 will be taxable.

2. Return of capital = $4,000

Return of capital = Libby's tax basis = $4,000

3. Capital gains = $6,000

Capital gains = Excess distribution - Return of capital

Excess distribution = Total distribution - Taxable distribution

= $20,000 - $10,000

Capital gains = $10,000 - $4,000 = $6,000

Add a comment

Answer 2

Similar Homework Help Questions

On January 1, Scorpio Corporation (a calendar year taxpayer) has accumulated E & P of $200,000....

On January 1, Scorpio Corporation (a calendar year taxpayer) has accumulated E & P of $200,000. During the year, Scorpio incurs a net loss of $300,000 from operations that accrues ratably. On June 30, Scorpio distributes $115,000 to Laura, its sole shareholder. How much of the $115,000 represents ordinary dividend income to Laura? $100,000 $0 $50,000 $115,000 None of the above.
At the beginning of the year, Myrna Corporation (a calendar year taxpayer) holds E & P...

At the beginning of the year, Myrna Corporation (a calendar year taxpayer) holds E & P of $87,900. The corporation generates no additional E & P during the year. On December 31, the corporation distributes $131,850 to its sole shareholder, Abby, whose stock basis is $26,370. How does the Federal income tax law treat this distribution? As a result the distribution Abby has the following: • Dividend income:_____ $ • Return of capital: _____ $ • Capital gain:_____ $ •...
At the beginning of the year, Myrna Corporation (a calendar year taxpayer) has E & P...

At the beginning of the year, Myrna Corporation (a calendar year taxpayer) has E & P of $32,000. The corporation generates no additional E & P during the year. On December 31, the corporation distributes $50,000 to its sole shareholder, Abby, whose stock basis is $10,000. How is the distribution treated for tax purposes? If an amount is zero, enter "0". As a result the distribution Abby has the following: Dividend income: ? Return of capital: ? Capital gain: ?...

Exercise 19-21 (Algorithmic) (LO. 1) At the beginning of the year, Myrna Corporation (a calendar year...

Exercise 19-21 (Algorithmic) (LO. 1) At the beginning of the year, Myrna Corporation (a calendar year taxpayer) has E & P of $53,400. The corporation generates no additional E & P during the year. On December 31, the corporation distributes $80,100 to its sole shareholder, Abby, whose stock basis is $16,020. How is the distribution treated for tax purposes? If an amount is zero, enter "O" As a result the distribution Abby has the following: Dividend income: $ Return of...
Problem 13-9 (LO. 1, 3) At the start of the current year, Blue Corporation (a calendar...

Problem 13-9 (LO. 1, 3) At the start of the current year, Blue Corporation (a calendar year taxpayer) holds accumulated E & P of $100,000. Blue's current E & P is $60,000. At the end of the year, it distributes $200,000 ($100,000 each) to its equal shareholders, Pam and Jon. Their basis in the stock is $11,000 for Pam and $26,000 for Jon. How is the distribution treated for tax purposes? If an amount is zero, enter "O". Pam has...
At the beginning of the year, Teal Corporation had E & P of $210,000. On March...

At the beginning of the year, Teal Corporation had E & P of $210,000. On March 30, Teal sold an asset at a loss of $200,000. For the calendar year, Teal incurred a deficit in current E & P of $305,000, which includes the $200,000 loss on the sale of the asset. If Teal made a distribution of $50,000 to its sole shareholder on April 1 and the shareholder had a basis in her stock of $72,000, how will the...

QUESTION 7 A corporation sells property (basis of $175,000) to its sole shareholder for $125,000, the...

QUESTION 7 A corporation sells property (basis of $175,000) to its sole shareholder for $125,000, the fair market value of the property. With respect to the sale, The shareholder has a basis of S175,000 in the property. The corporation has a tax loss of S50,000. The corporation does not recognize a tax loss but reduces its E & P account $50,000. The shareholder has a constructive dividend of $50,000. None of the above QUESTION 8 Assume taxable income is the...
At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E...

At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E & P of $100,000. Blue’s current E & P is $60,000, and at the end of the year, it distributes $200,000 ($100,000 each) to its equal shareholders, Pam and Jon. Pam’s stock basis is $11,000; Jon’s stock basis is $26,000. Complete the following table: Pam Jon Taxable dividend Return of capital Taxable gain
24. LO.1, 4 At the start of the current year, Blue Corporation (a calendar year taxpayer)...

24. LO.1, 4 At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E&P of $100,000. Blue's current E&P is $60,000, and at the end of the year, it distributes $200,000 ($100,000 each) to its equal shareholders, Pam and Jon. Pam's stock basis is $11,000; Jon's stock basis is $26,000. How is the distribution treated for tax purposes?

Problem 17-32 (LO. 3, 7) Benton Company (BC), a calendar year entity, has one owner, who...

Problem 17-32 (LO. 3, 7) Benton Company (BC), a calendar year entity, has one owner, who is in the 37% Federal income tax bracket (any net capital gains or dividends would be taxed at a 20% rate). BC's gross income is $395,000, and its ordinary trade or business deductions are $245,000. Ignore the standard deduction (or itemized deductions) and the deduction for qualified business income. If required, round computations to the nearest dollar. a. BC is operated as a proprietorship,...

Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of...

Homework Answers

Add Answer to:
Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of...

Post as a guest

Earn Coins

On January 1, Scorpio Corporation (a calendar year taxpayer) has accumulated E & P of $200,000....

At the beginning of the year, Myrna Corporation (a calendar year taxpayer) holds E & P...

At the beginning of the year, Myrna Corporation (a calendar year taxpayer) has E & P...

Exercise 19-21 (Algorithmic) (LO. 1) At the beginning of the year, Myrna Corporation (a calendar year...

Problem 13-9 (LO. 1, 3) At the start of the current year, Blue Corporation (a calendar...

At the beginning of the year, Teal Corporation had E & P of $210,000. On March...

QUESTION 7 A corporation sells property (basis of $175,000) to its sole shareholder for $125,000, the...

At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E...

24. LO.1, 4 At the start of the current year, Blue Corporation (a calendar year taxpayer)...

Problem 17-32 (LO. 3, 7) Benton Company (BC), a calendar year entity, has one owner, who...

Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of...

Homework Answers

Add Answer to: Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of...

Post as a guest

Earn Coins

Add Answer to:
Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of...