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 next year?

Expert Solution


step 1	calculate deficit in current R&P

	(curent E&P/ no of months in year )*no of moths
	(478000/12)*6
	2,39,000.00

step 2	divideened to sooner	sooner

	accumulated E&P -Deficit in current E&P
	(392,000-239,000)
	1,53,000.00

	153,000 to be treated as dividended out of disitruittion from 784,000


	balance of E&P on first day of year

		(accumulated E&P- current E&P)-dividened paid
		(392000-478000)-153000
		-2,39,000.00

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ekkarill92 answered 1 year ago

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