Parrnell Corporation owns 25% of Cross Corporation's stock. On May 1, Cross Corporation, with current E...
Parrnell Corporation owns 25% of Cross Corporation's stock. On May 1, Cross Corporation, with current E & P of $75,000, distributes land (fair market value of $235,000; basis of $200,000) to Parrnell . The land is subject to a liability of $150,000, which Parrnell assumes.
a. Parrnell Corporation has dividend income of ?
b. dividends received deduction of ?
Homework Answers
Parrnell Corp own 25%
Cross corp E&P $75,000
Share of Parrnell @25% on E&P amounting to $18,750
(A) Dividend income of Parrnell Corp is $ 18,750
Land value (Market Value) $2,35,000
Less: Liability on above Land $ 1,50,000
Net Land Value $ 85,000
(B) Parrnell Share in above @25% amounting to $21,250
Net receipt to Parrnell Corp (B-A) $2,500
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