W Corporation was owned by shareholder C prior to a sale of allof his stock (basis at the beginning of the year, $5,000) to D inJune for $10,000. During the year, W Corporation distributed$60,000 on May 1 and $40,000 on September
1. Indicate how the distributions would be treated by individualshareholders C and D in the following situations (15):
Accumulated E&P
Current E&P
a
10,000
50,000
b
(70,000)
50,000
c
95,000
(18,250)
W Corporation was owned by shareholder C prior to a sale of allof his stock (basis at the beginning of the year, $5,000) to D inJune for $10,000. During the year, W Corporation distributed$60,000 on May 1 and $40,000 on September
1. Indicate how the distributions would be treated by individualshareholders C and D in the following situations (15):
Accumulated E&P | Current E&P | |
a | 10,000 | 50,000 |
b | (70,000) | 50,000 |
c | 95,000 | (18,250) |
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23) Maxwell Corporation reportsthe following results:
Maxwell's dividends-received deduction is
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24) Identify which of thefollowing statements is false.
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25) Exit Corporation hasaccumulated E&P of $24,000 at the beginning of the current taxyear. Current E&P is $20,000. During the year the corporationmakes the following distributions to its sole shareholder who has a$22,000 basis for her stock.
The treatment of the $15,000 August 1 distribution would be
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26) Current E&P does notinclude
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27) Identify which of thefollowing statements is true.
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28) Crossroads Corporationdistributes $60,000 to its sole shareholder Harley. Crossroads hasearnings and profits of $55,000 and Harley's basis in her stock is$20,000. After the distribution, Harley's basis is
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29) Hogg Corporation distributes$30,000 to its sole shareholder, Ima. At the time of thedistribution, Hoggs' E&P is $14,000 and Ima's basis in herstock is $10,000. Ima's gain from this transaction is
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30) One consequence of aproperty distribution by a corporation to a shareholder is
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31) Identify which of thefollowing statements is true.
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32) Which of the following isnot a reason for a stock redemption?
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33) Elijah owns 20% of ParkCorporation's single class of stock. Elijah's basis in the stock is$8,000. Park's E&P is $28,000. If Park redeems all of Elijah'sstock for $48,000, Elijah must report dividend income of
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Thriller Corporation has one class of voting common stock, of which 1,000 shares are issued and outstanding. The shares are owned as follows:
| Joe Jackson | 400 |
| Mike Jackson (Joeâs son) | 200 |
| Jane Jackson (Joeâs daughter) | 200 |
| Vinnie Price (unrelated) | 200 |
| Total | 1,000 |
Thriller Corporation has current E&P of $300,000 for this year and accumulated E&P at January 1 of this year of $500,000.
During this year, the corporation made the following distributions to its shareholders:
03/31: Paid a dividend of $10 per share to each shareholder ($10,000 in total).
06/30: Redeemed 200 shares of Joeâs stock for $200,000. Joeâs basis in the 200 shares redeemed was $100,000.
09/30: Redeemed 60 shares of Vinnieâs stock for $60,000. His basis in the 60 shares was $36,000.
12/31: Paid a dividend of $10/share to each shareholder ($7,400 in total).
Compute the corporationâs accumulated E&P at January 1 of next year. (Round all intermediate calculations to 2 decimal places. Round final answers to the nearest dollar amount.)
