ZuoTi.Pro
Question

24. LO.1, 4 At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E&P of $100,000. Bl

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Pam has the following:
Dividend income: $80,000
Capital gain: $9,000
Stock basis after distribution: $0

Jon has the following:
Dividend income: $80,000
Capital gain: $0
Stock basis after distribution: $6,000

Statement of distribution for shareholders for tax purpose :-

Pam   Jon

Total distribution $100,000 $100,000

less: Dividend income $80,000 $80,000

Equals $20,000 $20,000

less : Stock basis $11,000 $20,000

Capital gain    $9,000 $0.

Therefore, Pam has a taxable gain of $9000 which reduces the stock basis to $0, whereas Jon has not any taxable

gain but the stock basis has reduced to $6,000 [$26,000 - $20,000]

*Pam and Jon's dividend income of $80,000 each [($100,000 Accumulated E&P + $60,000 current E&P) / 2]

1 0
Add a comment
Know the answer?
Add Answer to:
24. LO.1, 4 At the start of the current year, Blue Corporation (a calendar year taxpayer)...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 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 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 $290,000. Blue's current E & P is $174,000, and at the end of the year, it distributes $580,000 ($290,000 each) to its equal shareholders, Pam and Jon. Pam's stock basis is $40,600; Jon's stock basis is $162,400. How is the distribution treated for tax purposes? If an amount is zero, enter "0". Pam has the following: Dividend income: $ Capital gain:...

  • 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

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

    Problem 13-14 (LO. 1, 3) Chang Corporation is a calendar year taxpayer. At the beginning of the current year, Chang holds accumulated E & P of $33,000. The corporation incurs a deficit in current E&P of $46,000 that accrues ratably throughout the year. On June 30, Chang distributes $20,000 to its sole shareholder, Libby. If Libby's stock has a basis of $4,000, how is she taxed on the distribution? Taxable dividend income in the amount of $ Return of capital...

  • 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: ?...

  • On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of $300,000. Its current E &am...

    On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of $300,000. Its current E & P for the year is $90,000 (before considering dividend distributions). During the year, Tulip distributes $600,000 ($450,000 to Anne on April 1, $150,000 To Tom on August 1) to its two shareholders, Anne and Tom. Anne has a basis in her stock of $65,000, while Tom's basis is $120,000. What is the effect of the distribution by Tulip Corporation on...

  • 12. Robin Corporation, a calendar year taxpayer, has a deficit in current E & P of...

    12. Robin Corporation, a calendar year taxpayer, has a deficit in current E & P of $200,000 and a $580,000 positive balance in accumulated E & P. If Robin determines that a $700,000 distribution to its shareholders is appropriate at some point during the year, a.)What is the maximum amount of the distribution that could potentially be treated as a dividend and what date would that distribution need to be made? b.) Refer to the facts above, assume that the...

  • 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:_____ $ •...

  •   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.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT