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.)

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
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