Question

 Fill in the blanks on the following table

E&p	shareholder basis	distribution	dividend	return of capital	capital gain
20,000	300,000	80,000
120,000	10,000	170,000
220,000	100,000	170,000
20,000	0	80,000
<20,000>	50,000	170,000

Answer 1

Row 1:

Distribution = 80,000. E&P = 20,000

Out of distribution of 80,000, 20,000 will be dividend; balance 60,000 will be return of capital since balance 60,000 is less than shareholder basis of 300,000

Row 2:

Distribution = 170,000.

Since E&P = 120,000, hence 120,000 will be dividend.

Balance distribution (50,000), 10,000 (to the extent of shareholder basis) will be return of capital and 40,000 will be capital gain

Row 3:

Distribution = 170,000 and E&P = 220,000

Distribution is less than E&P. Entire distribution of 170,000 will be dividends

Row 4:

From distribution of 80,000, amount of 20,000 (equal to E&P) will be dividends. Since shareholder basis is 0, balance distribution of (80,000 - 20,000=) 60,000 will be capital gain

Row 5:

Since E&P is negative, distribution to the extent of shareholder basis =50,000 will be return of capital, balance (170,000 - 50,000=) 120,000 will be capital gain.