Ashley, the sole shareholder of Hawk Corporation, has a stock basis of $400,000 at the beginning of the year. On July 1, she sells all of her stock for $2 million (1 million Matt) and (1 million Brody) . On January 1, Hawk has accumulated E & P of $180,000 and during the year, current E & P of $320,000. Hawk makes the following cash distributions: $270,000 to Ashley on March 31, $180,000 to Matt on October1 and $180,000 to Brody on December 1. Use the format below; to (1) determine how the distributions are taxed to Ashley, Matt and Brody? (2)Ashley’s recognized gain on the 7/1 sale to Matt and Brody? Current year Accumulated E&P E&P Distributions Ashley’s Basis 400,000 at the beginning of the year Div. Inc. Ret. of Cap Basis Cap. Gains
Ashley, the sole shareholder of Hawk Corporation, has a stock basis of $400,000 at the beginning of the year. On July 1, she sells all of her stock for $2 million (1 million Matt) and (1 million Brody) . On January 1, Hawk has accumulated E & P of $180,000 and during the year, current E & P of $320,000. Hawk makes the following cash distributions: $270,000 to Ashley on March 31, $180,000 to Matt on October1 and $180,000 to Brody on December 1. Use the format below; to (1) determine how the distributions are taxed to Ashley, Matt and Brody? (2)Ashley’s recognized gain on the 7/1 sale to Matt and Brody?
Current year Accumulated
E&P E&P Distributions
Ashley’s Basis 400,000 at the beginning of the year
Div. Inc. Ret. of Cap Basis Cap. Gains
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