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a. How much of the $120,000 in total distributions will be treated as dividends? Dividends

a. How much of the $120,000 in total distributions will be treated as dividends? Dividends

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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! Required information [The following information applies to the questions displayed below.] Lone Star Company is a calendar-year corporation, and this year Lone Star reported $100,000 in current E&P that accrued evenly throughout the year. At the beginning of the year, Lone Star's accumulated E&P was $12,000. At the beginning of the year, Lone Star's sole shareholder was Matt McCon. Lone Star declared $30,000 in cash distributions on each of the following dates: March 31, June 30, September 30, and December 31. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a. How much of the $120,000 in total distributions will be treated as dividends? Dividends
Transcribed Image Text:! Required information [The following information applies to the questions displayed below.] Lone Star Company is a calendar-year corporation, and this year Lone Star reported $100,000 in current E&P that accrued evenly throughout the year. At the beginning of the year, Lone Star's accumulated E&P was $12,000. At the beginning of the year, Lone Star's sole shareholder was Matt McCon. Lone Star declared $30,000 in cash distributions on each of the following dates: March 31, June 30, September 30, and December 31. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a. How much of the $120,000 in total distributions will be treated as dividends? Dividends
b. Suppose that Matt sold half of his shares to Chris Coop on June 1st for $40,000. How much dividend income will Matt recognize this year? Dividend recognized Show Transcribed Text Ć c. If Matt's basis in his Lone Star shares was $7,000 at the beginning of the year, how much capital gain will he recognize on the sale and distributions from Lone Star? Capital gain recognized on the sale and distribution
Transcribed Image Text:b. Suppose that Matt sold half of his shares to Chris Coop on June 1st for $40,000. How much dividend income will Matt recognize this year? Dividend recognized Show Transcribed Text Ć c. If Matt's basis in his Lone Star shares was $7,000 at the beginning of the year, how much capital gain will he recognize on the sale and distributions from Lone Star? Capital gain recognized on the sale and distribution
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