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Ashley, the sole shareholder of Hawk Corporation, has a stock basis of $400,000 at the beginning...

Ashley, the sole shareholder of Hawk Corporation, has a stock basis of $400,000 at the beginning of the year. On July 1, she sells all of her stock for $2 million to Matt (1 million) and Brody (1 million) . On January 1, Hawk has accumulated E & P of $180,000 and during the year, current E & P of $320,000. Hawk makes the following cash distributions: $270,000 to Ashley on March 31, $180,000 to Matt on October1 and $180,000 to Brody on December 1.

Use the format below; to (1) determine how the distributions are taxed to Ashley, Matt and Brody? (2)Ashley’s recognized gain on the 7/1 sale to Matt and Brody?

Current year E&P =

Accumulated E&P =

Distributions =

Ashley’s Basis 400,000 at the beginning of the year

Div. Inc. =

Ret. of Cap =

Basis =

Cap. Gains =

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jeff jeffy answered 2 years ago
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