ACCT 20353 Chapter 1: Notes
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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) |
22) Boxer Corporation buysequipment in January of the current year with a 7-year class lifefor $15,000. The corporation expensed the $15,000 under Sec. 179.The deduction in the year of purchase for E&P purposes due tothe acquisition and expensing of the equipment is
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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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