Question

ABC Corp. paid two cash distributions during year 5. The first was $42,000, and the second...

ABC Corp. paid two cash distributions during year 5. The first was $42,000, and the second was $33,000. Accumulated earnings and profits (E & P) at the end of year 4 were $10,000. Current E & P for year 5 is $30,000. How will the first distribution be allocated between current E & P and accumulated E & P?

Current E & P Accumulated E & P

a. $16,800 $25,200

b. $16,800 $10,000

c. $25,200 $16,800

d. $30,000 $10,000

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Correct option is: B. $16,800 $10,000
Workings:
Cash Distributions:
First = $       42,000
Second = $       33,000
Total Cash Distributions = $       75,000
Distribution of Current E & P = $30000 X ($42000/$75000)
= $       16,800
Accumulated E & P = $       10,000
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
(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....
Allocating Distributions. AB Corp has 1,000 shares outstanding and two equal shareholders, Allison and Bella. Bella...
Allocating Distributions. AB Corp has 1,000 shares outstanding and two equal shareholders, Allison and Bella. Bella has a basis of $5,000 in her 500 shares and Allison has a basis of $2,500 in her 500 shares, both owners purchased their shares 3 years ago. Determine the tax consequences of the following distributions to the shareholders and to AB Corp. A.AB Corp has accumulated E&P of $5,000 and current E&P of $3,000 and makes a distribution of $10,000 on December 31st...
ABC Corp. generated $500,000 in Free Cash Flow in the year that ends today and paid...
ABC Corp. generated $500,000 in Free Cash Flow in the year that ends today and paid the entire amount out to it's owners as a dividend. Assuming their Free Cash Flow grows by 5% per year for the next four year and then continues to grow at a 2.5% rate per year forever, what is the value of ABC Corp. today assuming they have need to Earn 9% returns for their owners? Group of answer choices: a)$8,447,000 b)$8,613,000 c)$9,113,000
During the year, Chelsie, the sole shareholder of a calendar year S corporation, received a distribution...
During the year, Chelsie, the sole shareholder of a calendar year S corporation, received a distribution from the S-corp of $33,000 in cash. At the end of last year, her stock basis was $9,000. The corporation earned $11,000 ordinary income during the year. The corporation has no accumulated E & P, from prior years, but does have a beginning of the year balance in AAA of $3,000. How is the distribution to Chelsie taxed on her federal income tax return?
in its first year of operation as an A corp the corporation had ordinary business income...
in its first year of operation as an A corp the corporation had ordinary business income of $8000. Iit also has tax exempt income of $1000. the corporation had $2000 of c corp earnings and profits accumulated prior to the s corp election. The shareholder basis in the shares at the beginning of that first year was $3000. At the end of that year the corporation distributes $8500 to its sole shareholder. How is the distribution treated for tax purposes?...
At the end of the year, before distributions, Bombay (an S corporation) has an accumulated adjustments...
At the end of the year, before distributions, Bombay (an S corporation) has an accumulated adjustments account balance of $15,000 and accumulated E&P of $20,000 from a previous year as a C corporation. During the year, Nicolette (a 40 percent shareholder) received a $20,000 distribution (the remaining shareholders received $30,000 in distributions). (Assume her stock basis is $40,000 after considering her share of Bombay’s income for the year but before considering the effects of the distribution.) Required: What is the...
In its first year of operation as an S Corp, the corporation had an ordinary business...
In its first year of operation as an S Corp, the corporation had an ordinary business income of $8,000. It also has a tax-exempt income of $1,000. The corporation had $2,000 of C Corp earnings and profits accumulated prior to the S Corp election. The shareholder basis in the shares at the beginning of that first S Corp year was $3,000. At the end of that year, The corporation distributes $8,500 to its sole shareholder. How is the distribution treated...
In its first year of operation as an S Corp the corporation had ordinary business income...
In its first year of operation as an S Corp the corporation had ordinary business income of $8,000. It also has tax exempt income of $1,000. The corporation had $2,000 of C Corp earnings and profits accumulated prior to the S Corp election. The shareholder basis in the shares at the beginning of that first S Corp year was $3,000. At the end of that year The corporation distributes $8,500 to its sole shareholder. How is the distribution treated for...
During the last year, Len Corp. generated $1,170.00 million in cash flow from operating activities and...
During the last year, Len Corp. generated $1,170.00 million in cash flow from operating activities and had negative cash flow generated from investing activities (-640.00 million). At the end of the first year, Len Corp. had $200 million in cash on its balance sheet, and the firm had $280 million in cash at the end of the second year. What was the firm’s cash flow (CF) due to financing activities in the second year? $337.50 million $562.50 million $-225.00 million...
The following transactions occurred during the first year of operations for Cougar Corp. for each transaction...
The following transactions occurred during the first year of operations for Cougar Corp. for each transaction prepare the journal entry. Note: these are NOT adjusting entries. a. Cougar Corp. sold shares of its common stock for $73,000 cash. b. Cougar Corp. purchased land for $27,000 cash. The market value of the land was $29,500. c. Cougar Corp. paid employees salaries of $4,750 cash. d. Cougar Corp. collected cash of $3,416 for services performed. e. Cougar Corp. purchased $590 of office...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT