Anne and Paul are shareholders of Android Corporation. Each has a stock basis of $10,000. Android...

Anne and Paul are shareholders of Android Corporation. Each has a stock basis of $10,000. Android has
$12,000 of current E&P and $5,000 of accumulated E&P. Android distributes $3,000 to Anne on July 31
and to Paul $33,000 On December 1. What are the tax consequences of the distribution?
(a) What is Ann’s dividend income (if any)?
(b) What is Ann’s capital gain? (if any)?
(c) What is Paul’s dividend income (if any)?
(d) What is Paul’s capital gain (if any)?

Solutions

Expert Solution

Anne and Paul are shareholders of Android Corporation. Each has a stock basis of $10,000. Android has
$12,000

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Paul now owns 500 shares of Martin Inc with a stock basis of $50,000. The total...

Paul now owns 500 shares of Martin Inc with a stock basis of $50,000. The total outstanding shares of Martin Inc are 1,000. Of the remaining 500 shares, 50 shares are owned by Mike (son), and the remaining 450 shares of Martin Inc are owned by an unrelated shareholder. Martin Inc has E&P of $640,000. a. What are the tax consequences to Paul if in a stock redemption; Martin Inc redeems 100 shares from Paul for $30,000? b. What are...

Paul Sarver is the controller of a corporation whose stock is not listed on a national...

Paul Sarver is the controller of a corporation whose stock is not listed on a national stock exchange. The company has just received a patent on a product that is expected to yield substantial profits in a year or two. At the moment, however, the company is experiencing financial difficulties; and because of inadequate working capital, it is on the verge of defaulting on a note held by its bank. At the end of the most recent fiscal year, the...

Sean owns stock in the McNamara Corporation. Sean has a basis (original cost) in his stock...

Sean owns stock in the McNamara Corporation. Sean has a basis (original cost) in his stock of $100. Which of the following would not be included in Sean's income? Group of answer choices d. Dividends paid by the McNamara Corporation, assuming that it is not a U.S. Corporation. a. Qualified dividends received from McNamara Corporation. b. A distribution by McNamara Corporation to its shareholders in excess of earnings and profits, of which Sean's share of the distribution is $50. c....

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...

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

9. 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...

Charlie Brown, who has AGI of $105,000, owns stock in Peanuts Corporation with a basis of...

Charlie Brown, who has AGI of $105,000, owns stock in Peanuts Corporation with a basis of $17,600. He donates the stock to a qualified charitable organization on December 11, 2019. What is the amount of Charlie Brown’s charitable contribution deduction on his 2019 Schedule A, assuming that he purchased the stock on May 30, 2019, and the stock had a fair market value of $24,150 when he made the donation, and assuming that he makes no charitable contribution elections? b....

a. Charlie Brown, who has AGI of $105,000, owns stock in Peanuts Corporation with a basis...

a. Charlie Brown, who has AGI of $105,000, owns stock in Peanuts Corporation with a basis of $17,600. He donates the stock to a qualified charitable organization on December 11, 2019. What is the amount of Charlie Brown’s charitable contribution deduction on his 2019 Schedule A, assuming that he purchased the stock on May 30, 2019, and the stock had a fair market value of $24,150 when he made the donation, and assuming that he makes no charitable contribution elections?...

A “C” corporation, Brown Inc., that is not undergoing a liquidation, distributes property (basis of $10,000...

A “C” corporation, Brown Inc., that is not undergoing a liquidation, distributes property (basis of $10,000 and fair market value of $20,000) to Brenda, its shareholder. Brown Inc. had $100,000 of earnings & profits prior to this transaction. What, if any, taxable income is recognized by Brown, Inc.? Please explain impact on Brown Inc’s earnings and profits from the distribution. What are the tax consequences to Brenda?

On January 2, 2017, Dwyer Corporation granted 10,000 nonqualified stock options each to four of its...

On January 2, 2017, Dwyer Corporation granted 10,000 nonqualified stock options each to four of its key executives (40,000 options in total). Under the terms of the option plan, upon exercise, each executive will pay the exercise price of $10 per share of common stock ($1 par value). The options were exercisable after January 1, 2020, and the executives were required to be employees of Dwyer at the date of exercise. The Black–Scholes value of the option on the grant...

What is the basis of the stock in the hands of the shareholder, and what is the basis of the property contributed in the hands of the corporation?

Explain the 80% rule as it pertains to the formation of a corporation. An individual contributes property with a fair market value in excess of basis to a corporation in exchange for stock. What is the basis of the stock in the hands of the shareholder, and what is the basis of the property contributed in the hands of the corporation? A corporation may make a distribution to its shareholders. Depending on the circumstances, in the hands of the...

Subjects