ABC Corporation’s beginning balance of accumulated earnings and profits is a deficit of $100,000. It had current earnings and profits of $20,000. On March 1, the Corporation distributed $45,000 to its sole shareholder, R, who had a basis in his stock of $30,000. R will report: A. no dividend income and a capital gain of $15,000 B. a dividend of $20,000 and return of capital of $25,000 C. a dividend of $20,000 and capital gain of $25,000 D. no dividend income and a capital gain of $25,000 E. none of the above.
ABC Corporation’s beginning balance of accumulated earnings and profits is a deficit of $100,000. It had current earnings and profits of $20,000. On March 1, the Corporation distributed $45,000 to its sole shareholder, R, who had a basis in his stock of $30,000. R will report: A. no dividend income and a capital gain of $15,000 B. a dividend of $20,000 and return of capital of $25,000 C. a dividend of $20,000 and capital gain of $25,000 D. no dividend income and a capital gain of $25,000 E. none of the above.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ABC Corporation’s beginning balance of
A. no dividend income and a
B. a dividend of $20,000 and return of capital of $25,000
C. a dividend of $20,000 and capital gain of $25,000
D. no dividend income and a capital gain of $25,000 E. none of the above.
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