Question

In: Accounting

11. On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of...

11. On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of $300,000. Its current E & P for the year is $90,000 (before considering dividend distributions). During the year, Tulip distributes $600,000 ($300,000 each) to its equal shareholders, Anne and Tom. Anne has a basis in her stock of $65,000, and Tom’s basis is $120,000. What is the effect of the distribution by Tulip Corporation on Anne and Tom?

Solutions

Expert Solution


Related Solutions

On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of $400,000....
On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of $400,000. Its current E & P for the year is $120,000 (before considering dividend distributions). On the last day of the year, Tulip distributes $600,000 ($150,000 each) to its four equal shareholders, Anne, Andrew, Tom and Terry. Anne has a basis in her stock of $65,000, while Andrew’s basis is $120,000. Tom has a $5,000 basis in his stick while Terry has a $80,000 basis....
On January 1, 2019, C Corporation (a calendar year taxpayer) has E&P of $30,000. Its Current...
On January 1, 2019, C Corporation (a calendar year taxpayer) has E&P of $30,000. Its Current year E&P is ($3,600). On December 31, 2019, the corporation distributes $40,000 to its sole shareholder, Jimmy. Jimmy had purchased his stock in C Corporation for $7,500, 4-years ago. Required: a. How is the Distribution characterized by the Corporation b. How much of the distribution must W report as Capital Gains on his tax return
On January 1, 2019, Kinney, Inc., an S corporation, reports $14,400 of accumulated E & P...
On January 1, 2019, Kinney, Inc., an S corporation, reports $14,400 of accumulated E & P and a balance of $36,000 in AAA. Kinney has two shareholders, Erin and Frank, each of whom owns 500 shares of Kinney's stock. Kinney's nonseparately stated ordinary income for the year is $18,000. Kinney distributes $21,600 to each shareholder on July 1, and it distributes another $10,800 to each shareholder on December 21. How are the shareholders taxed on the distributions? Ignore the 20%...
On January 1, 2019, Kinney, Inc., an S corporation, reports $4,000 of accumulated E & P...
On January 1, 2019, Kinney, Inc., an S corporation, reports $4,000 of accumulated E & P and a balance of $10,000 in AAA. Kinney has two shareholders, Erin and Frank, each of whom owns 500 shares of Kinney's stock. Kinney's nonseparately stated ordinary income for the year is $5,000. Kinney distributes $6,000 to each shareholder on July 1, and it distributes another $3,000 to each shareholder on December 21. How are the shareholders taxed on the distributions? Ignore the 20%...
5. Speed Corporation has current E&P of $200,000 and accumulated E&P of $100,000. It makes a...
5. Speed Corporation has current E&P of $200,000 and accumulated E&P of $100,000. It makes a distribution of land to its shareholder Bill. Bill’s stock basis is $600,000. The land was purchased by Speed two years ago for $400,000 and at the time of the distribution has FMV of $550,000.   Bill owns 75 shares, his sister owns 10 shares and the remaining 15 shares are owned by an unrelated party. (7 points) What are the tax consequences to Speed and...
Exit Corporation has accumulated E&P of $24,000 at the beginning of the current tax year. Current...
Exit Corporation has accumulated E&P of $24,000 at the beginning of the current tax year. Current E&P is $20,000. During the year, the corporation makes the following distributions to its sole shareholder who has a $22,000 basis for her stock. Date Amount Distributed April 1 $20,000 June 1 20,000 August 1 15,000 November 1     5,000 The treatment of the $15,000 August 1 distribution would be Group of answer choices $5,000 is taxable as a dividend from current E&P, and...
A calendaryear corporation has a​ $75,000 current​ E&P amount, and a​ $25,000 positive accumulated​ E&P balance...
A calendaryear corporation has a​ $75,000 current​ E&P amount, and a​ $25,000 positive accumulated​ E&P balance at the beginning of the year. Shareholders of the corporation have a total basis in outstanding shares of​ $40,000. The corporation pays a​ $120,000 distribution to the shareholders. The tax results to the shareholders will be A. dividend income of​ $60,000 and capital gain of​ $60,000. B. dividend income of​ $100,000 and capital gain of​ $20,000. C. dividend income of​ $100,000 and a tax...
On August 1, 2012, all of the outstanding stock of Bridge Corporation (a calendar year taxpayer)...
On August 1, 2012, all of the outstanding stock of Bridge Corporation (a calendar year taxpayer) was purchased from an unrelated party for cash by Infrastructure Corporation. On July 1, 2015, Bridge adopted a resolution providing for a plan to completely liquidate. The plan of complete liquidation provided that Bridge would be liquidated upon payment of its indebtedness to a large, publicly held lender, but in any event not later than March, 2018. Bridge’s loan agreement had been entered into...
This year, Sooner Company reports a deficit in current E&P of ($362,000). Its accumulated E&P at...
This year, Sooner Company reports a deficit in current E&P of ($362,000). Its accumulated E&P at the beginning of the year was $270,000. Sooner distributed $540,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock before the distribution is $101,500. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a) How much of the $540,000 distribution is treated as a dividend to...
This year, Sooner Company reports a deficit in current E&P of ($478,000). Its accumulated E&P at...
This year, Sooner Company reports a deficit in current E&P of ($478,000). Its accumulated E&P at the beginning of the year was $392,000. Sooner distributed $784,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock before the distribution is $120,000. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) c. What is Sooner’s balance in accumulated E&P on the first day of...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT