Question

At the beginning of the year, Data, a C corporation, had a $45,000 deficit in accumulated...

At the beginning of the year, Data, a C corporation, had a $45,000 deficit in accumulated earnings and profits. For the current year, Data reported earnings and profits of $15,000. Data distributed $18,000 to its shareholders during the current year. What amount of the distribution is treated as a taxable dividend?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer - $15,000 is treated as a taxable dividend.

A corporation's distribution amount on their stock to it's shareholders will be the dividend distribution that are made with current earnings or profits or accumulated earnings or profits. In this question, $18,000 distribution would be a dividend to the extent of the $15,000 of the current period earnings or profits.

$45,000 deficit in its accumulated earnings and profitsprofits would began the next year with the same amountamount because distribution do not increase a deficit.

Thumbs up if it was helpful. Thank you!

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
Prior to 2019, X-Men Corporation had accumulated earnings and profits of $12,000, and during 2019 its...
Prior to 2019, X-Men Corporation had accumulated earnings and profits of $12,000, and during 2019 its net current earnings amounted to $18,000. Enjoying excellent cash flow at the end of 2019, X-Men distributed $45,000 cash to its sole stockholder, Arnold, who had purchased his stock for $11,000 several years ago. How is this distribution treated for tax purposes by Arnold?
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
At the beginning of the year, Lewis, Inc. (an S corporation) had an $8,000 balance in...
At the beginning of the year, Lewis, Inc. (an S corporation) had an $8,000 balance in AAA. During the year, Lewis earned business income of $15,000 and distributed $30,000 to its sole shareholder (Jerry). Jerry's basis in his stock was $12,000 at the beginning of the year. How much of the this distributions will be treated as a capital gain to Jerry? A. $7,000 B. $0 C. $18,000 D. $3,000
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...
35. This year, Sooner Company reports a deficit in current E&P of ($300,000). Its accumulated E&P...
35. This year, Sooner Company reports a deficit in current E&P of ($300,000). Its accumulated E&P at the beginning of the year was $200,000. Sooner distributed $400,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock is $75,000. a) How much of the $400,000 distribution is treated as a dividend to Boomer? b) What is Boomer’s tax basis in his Sooner stock after the distribution? c) What is Sooner’s balance...
Dividends A distribution by a corporation to a shareholder with respect to its stock will constitute...
Dividends A distribution by a corporation to a shareholder with respect to its stock will constitute a capital gain to a shareholder: Only when there are “earnings and profits” of a corporation Only when there are no “earnings and profits” of a corporation To the extent of the shareholder’s basis in the stock To the extent a distribution exceeds a shareholder’s basis in his stock If a corporation has current year earnings and profits and negative accumulated earnings and profits...
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?...
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...
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.
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT