In each of the independent cases below, indicate the taxable portion and return of capital, assume...
In each of the independent cases below, indicate the taxable portion and return of capital, assume sufficient basis for each distribution.
|
accumulated E&P Beginning of year |
current E&P | Year end cash distribution | taxable amount | return of capital |
| a. $40,000 | $20,000 | $60,000 | ? | ? |
| b. 40,000 | 20,000 | 70,000 | ? | ? |
| c. (40,000) | 40,000 | 30,000 | ? | ? |
| d. (10,000) | (20,000) | 15,000 | ? | ? |
| e. 40,000 | (15,000) | 35,000 | ? | ? |
Homework Answers
a):-Taxable income =$(40000-20000)=$20000,Return on capital=$20000/60000=1/3x100=33.33%
b):-Taxable income=$(40000-20000)=$20000,Return on capital=$20000/70000=2/7x100=28.57%
c):-Taxable income=$(-40000-40000)=$(80000) ,i,e NIL,,Return on capital=$-80000/30000=8/3x100=266%Loss
d):-Taxable income=$(-10000+20000)=$10000,Return on capital=$10000/15000=2/3x100=66.67%
e):-Taxable income=$(40000+15000)=$55000,Return on capital=$55000/35000=1.67x100=167%
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