a) Determine the amount of each distribution that is from current E&P, accumulated E&P, Return of capital, and capital gain by completing the following table: Date of Distribution July 1 December 1 Totals From Current E&P From Accumulated E&P Return of Capital Capital Gain Total Distribution $100,000 $150,000 $250,000 b) Assume that the basis of the property distributed is $160,000. Determine the amount of gain/loss realized and recognized by ImagineNation Corporation. Gain/Loss realized_ Gain/Loss recognized_
a) Determine the amount of each distribution that is from current E&P, accumulated E&P, Return of capital, and capital gain by completing the following table: Date of Distribution July 1 December 1 Totals From Current E&P From Accumulated E&P Return of Capital Capital Gain Total Distribution $100,000 $150,000 $250,000 b) Assume that the basis of the property distributed is $160,000. Determine the amount of gain/loss realized and recognized by ImagineNation Corporation. Gain/Loss realized_ Gain/Loss recognized_
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:On January 1 of the current year, ImagineNation Corporation had accumulated E & P of $50,000. It
had
$150,000 of current E & P, earned evenly throughout the year. ImagineNation makes one cash
distribution of
$100,000 on July 1 and a property distribution of $150,000 on December 1. The sole shareholder,
Curtis, has a basis in the stock of $25,000.
a) Determine the amount of each distribution that is from current E&P, accumulated E&P, Return of
capital, and capital gain by completing the following table:
Date of
Distribution
July 1
December 1
Totals
Return of Capital
Accumulated E&P Capital
Gain
From Current From
E&P
Total Distribution
$100,000
$150,000
$250,000
b) Assume that the basis of the property distributed is $160,000. Determine the amount of gain/loss
realized and recognized by ImagineNation Corporation.
Gain/Loss realized_
Gain/Loss recognized_
Expert Solution
Step 1
SOLUTION;-
JANUARY 01- IMAGINE NATION CORPORATION HAD ACCUMULATED EARNING&PROFITS - 50000$
CURRENT E&P EARNED THROUGHOUT -150000$
IMAGINE NATION MAKES CASH DISTRIBUTION -100000$
CORPORATION MAKES PROPERTY DISTRIBUTION-150000$
SHAREHOLDER CURTIS HAS A STOCK BASIS -25000$
A)CURRENT DISTRIBUTION FROM CURRENT E&P IS- CASH DISTRIBUTION +PROPERTY DISTRIBUTION (100000$+150000$)-250000$
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