Question

Duval Corporation is a calendar year taxpayer. Polly owns all of its stock. Her basis for...

Duval Corporation is a calendar year taxpayer. Polly owns all of its stock. Her basis for the stock is $12,000. On April 1 of the current​ (non-leap) year Duval distributes $54,000 to Polly.

a

 b c d
Distribution
Dividend income
Remaining distribution
Return of Capital
Capital gain (loss)
Carryforward Accumulated E&P

Instructions: Determine the tax consequences of the cash distribution in each of the following independent​ situations:

a) Current​ E&P of $25,000​; accumulated​ E&P of $15,000.
b) Current​ E&P of $25,000​; accumulated​ E&P deficit of $(34,000).
c) Current​ E&P deficit of $(72,000)​; accumulated​ E&P of $50,000.
d) Current​ E&P deficit of $(22,000)​; accumulated​ E&P deficit of $(15,000)

​(Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Complete all answer boxes. For zero​ amounts, make sure to enter​ "0" in the appropriate cell. Use parentheses or a minus sign for losses and​E&P deficits.)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
S. no. Current E&P Accumulated E&P Cash Distributed Dividedn Income Return on Capital
a. $25,000.00 $15,000.00 $54,000.00 $54,000.00 $0.00
b. $2,500.00 -$34,000.00 $54,000.00 $2,500.00 $51,500.00
c. -$72,000.00 $50,000.00 $54,000.00 $50,000.00 $4,000.00
d. -$22,000.00 -$15,000.00 $54,000.00 $0.00 $54,000.00
Note:
a. Current Year ( positive E&P), Previous Year (Loss E&P) then Dividend distributed from Current year E&P.
b. Current Year ( Loss E&P), Previous Year (Positive E&P ) then Dividend distributed from Previous year E&P
b. Current Year ( Positive E&P), Previous Year (Positive E&P ) then Dividend distributed from Previous as well current   year E&P
0 0
Know the answer?
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
Similar Questions
Sparrow Corporation is a calendar year taxpayer. At the beginning of the current year, Sparrow has...
Sparrow Corporation is a calendar year taxpayer. At the beginning of the current year, Sparrow has accumulated E & P of $184,400. The corporation incurs a deficit in current E & P of $258,160 that accrues ratably throughout the year. On June 30, Sparrow distributes $110,640 to its sole shareholder, Libby. If Libby's stock has a basis of $18,440, how is she taxed on the distribution? Taxable dividend income in the amount of $ Return of capital in the amount...
On September 30, Marsh Corporation, a calendar year taxpayer, sold a parcel of land (basis of...
On September 30, Marsh Corporation, a calendar year taxpayer, sold a parcel of land (basis of $320,000) for an $800,000 note. The note is payable in four installments, with the first payment due next year. Because Marsh did not elect out of the installment method, none of the $480,000 gain is taxed this year. Marsh Corporation had a $150,000 deficit in accumulated E & P at the beginning of the year. Before considering the effect of the land sale, Marsh...
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. How is the distribution treated for tax purposes?
At the beginning of the current year, Inga Corporation (a calendar year taxpayer) has accumulated E...
At the beginning of the current year, Inga Corporation (a calendar year taxpayer) has accumulated E & P of $30,000. During the year, Inga incurs a $12,000 loss from operations that accrues ratably. On April 1, Inga distributes $20,000 in cash to Galina, its sole shareholder. How is Galina taxed on the distribution? If an amount is zero, enter "0". Of the 20,000 distribution, $___ is taxed as a dividend and $___ represents a return on 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 $66,050. The corporation generates no additional E & P during the year. On December 31, the corporation distributes $99,075 to its sole shareholder, Abby, whose stock basis is $19,815. 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: $ •...
On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of $300,000....
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 ($300,000 each) to its equal shareholders, Anne and Tom. Anne has a basis in her stock of $65,000, and Tom’s basis is $120,000. What is the effect of the distribution by Tulip Corporation on Anne and Tom?
11. On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of...
11. 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 ($300,000 each) to its equal shareholders, Anne and Tom. Anne has a basis in her stock of $65,000, and Tom’s basis is $120,000. What is the effect of the distribution by Tulip Corporation on Anne and Tom?
(a) On July first of year two, X Corp., a calendar year taxpayer, made distributions of...
(a) On July first of year two, X Corp., a calendar year taxpayer, made distributions of $20,000 to A, its sole shareholder, whose stock had a $5,000 basis. No other distributions were made in year 2. As of December 31 of year one, X Corp. had no earnings and profits. In year two, X Corp. had earnings and profits of $15,000 as of July first, but only $5,000 for the entire year. Determine the tax consequences in the following situation....
As of January 1, 2019, Mercedes Corporation (a calendar year taxpayer) had a positive balance in...
As of January 1, 2019, Mercedes Corporation (a calendar year taxpayer) had a positive balance in Accumulated Earnings and Profits (E&P) of $100,000. For the tax year of 2019, Mercedes Corporation’s Current Earnings And Profits (E&P) was a “Deficit” (negative) ($60,000). On June 30, 2019, Mercedes Corporation distributed $120,000 to its sole shareholder. The amount of the distribution that is a Taxable Dividend income to the shareholder is: $40,000 $100,000 $30,000 $70,000
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 $86,750. The corporation generates no additional E & P during the year. On December 31, the corporation distributes $130,125 to its sole shareholder, Abby, whose stock basis is $26,025. If an amount is zero, enter "0". As a result the distribution Abby has dividend income of $__________ and a taxable capital gain of $____________. Abby's stock basis is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT