At the beginning of the year, Penguin Corporation (a calendar year taxpayer) has a deficit in accumulated E&P of ($55,000). Penguin's current E&P is $36,000 earned evenly throughout the year. At the end of the year, Penguin distributes $40,000 in cash to Holly, its sole shareholder. Holly's basis in the stock of Penguin Corporation is $2,000. What is Holly's Dividend Income, if any? What is Holly's Return of Capital, if any? What is Holly's Capital gain, if any?

At the beginning of the year, Penguin Corporation (a calendar year taxpayer) has a deficit in accumulated E&P of ($55,000). Penguin's current E&P is $36,000 earned evenly throughout the year. At the end of the year, Penguin distributes $40,000 in cash to Holly, its sole shareholder. Holly's basis in the stock of Penguin Corporation is $2,000. What is Holly's Dividend Income, if any? What is Holly's Return of Capital, if any? What is Holly's Capital gain, if any?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Assume the following year 2 income statement for Johnstone Corporation, which was a C corporation in year 1 and elected to be taxed as an S corporation beginning in year 2. Johnstone's earnings and profits at the end of year 1 were $11,560. Marcus is Johnstone's sole shareholder, and he has a stock basis of $46,000 at the end of year 1. Johnstone Corporation Income Statement December 31, Year 2 Year 2 (S Corporation) $ 174,000 ( 41,000) (66,000) (56,500) (10,000) ( 4,600) 12,540 $ 8,440 Sales revenue Cost of goods sold Salary to owners Employee wages Depreciation expense Miscellaneous expenses Interest income Overall net income What is Johnstone's accumulated adjustments account at the end of year 2, and what amount of dividend income does Marcus recognize on the year 2 distribution in each of the following alternative scenarios? (Leave no answer blank. Enter zero if applicable.) b. Johnstone distributed $11,200 to Marcus in year 2. Accumulated adjustments account Dividend income
Rodger owns 100 percent of the shares in Trevor Incorporated a C corporation. Assume the following for the current year: Trevor Incorporated’s pretax income = $21,500 Percentage of after-tax earnings retained by Trevor Incorporated = 0% (i.e., all after-tax earnings distributed) Rodger’s dividend tax rate = 15% Given these assumptions, how much cash does Rodger have from the dividend after paying taxes on the distribution? (Round your intermediate calculations and final answer to whole number dollar amount.)
22. At the beginning of the tax year, Tim had a $2,000 stock basis in the S corporation, World, Inc. Tim owns 25% of the outstanding World, Inc. stock. At the end of the tax year, World, Inc. reported on its Schedule K, a $16,000 ordinary loss, $4,000 of interest income, and $2,000 in nondeductible expense. Tim also has $10,000 in flow-through reportable income from other S corporations. How much of the World, Inc. ordinary loss can Tim deduct on his personal return? . $0 • $2,500 . $3,000 $4,000
Gene Grams is a 40% owner of a calendar year S corporation during the tax year. His beginning stock basis is $150,000, and the S corporation reports the following items. Ordinary income $72,000 Short-term capital gain 16,000 § 1231 loss 6,000 Tax-exempt interest income 5,000 Distributions 40,000 Gene sells all of his stock in the S corporation for $310,000. What is the amount and character of the gain or loss to Gene?
Jayhawk Company reports current E&P of $340,000 and a deficit in accumulated E&P at the beginning of the year of ($322,500). Jayhawk distributed $405,000 to its sole shareholder, Christine Rock, on the last day of the year. Christine's tax basis in her Jayhawk stock before the distribution is $57,000. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) b. What is Christine's tax basis in her Jayhawk stock after the distribution? Tax basis
This year Barney purchased 440 shares of Bell common stock for $16.50 per share. At year-end the Bell shares were only worth $3.30 per share. What amount can Barney deduct as a loss this year?
Jayhawk Company reports current E&P of $452,500 and a deficit in accumulated E&P at the beginning of the year of ($412,500). Jayhawk distributed $597,500 to its sole shareholder, Christine Rock, on the last day of the year. Christine’s tax basis in her Jayhawk stock before the distribution is $98,500. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a. How much of the $597,500 distribution is treated as a dividend to Christine? b. What is Christine’s tax basis in her Jayhawk stock after the distribution?
sanju
Show your work On January 1 of the current year, Rhondell Corporation has accumulated E & P of $174,000. Current E & P for the year is $522,000, earned evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of Rhondell from January 1 to April 30. On May 1, Elizabeth sells all of her stock to Marshall. Rhondell makes two distributions to shareholders during the year: a total of $278,400 ($139,200 to Elizabeth and $139,200 to Jonathan) on April 30 and a total of $487,200 ($243,600 to Jonathan and $243,600 Marshall) on December 31. Determine the allocation of the distributions by completing the table below. Assume that the shareholders have sufficient basis in their stock for any amount that is treated as return of capital.
Jayhawk Company reports current E&P of $340,000 and a deficit in accumulated E&P at the beginning of the year of ($322,500). Jayhawk distributed $405,000 to its sole shareholder, Christine Rock, on the last day of the year. Christine's tax basis in her Jayhawk stock before the distribution is $57,000. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) c. What is Jayhawk's balance in accumulated E&P on the first day of next year? Balance in accumulated E&P at the beginning of next year
Cramer Corporation, a calendar year, accrual basis corporation, reported $1.25 million of net income after tax on its 2020 financial statements prepared in accordance with GAAP. The corporation's books and records reveal the following information: . . Cramer's federal income tax expense per books was $205,000. Cramer's book income included $15,000 of dividends received from a domestic corporation in which Cramer owns a 25 percent stock interest, and $6,500 of dividends from a domestic corporation in which Cramer owns a 5 percent stock interest. Cramer recognized $15,000 of capital losses this year and no capital gains. . . Cramer recorded $10,600 of book expense for meals and $12.500 of book expense for entertainment costs. . Cramer's depreciation expense for book purposes totaled $405,000. MACRS depreciation was $475,000. Required: a. Compute Cramer's federal taxable income and regular tax liability. b. Prepare a Schedule M-1, page 6, Form 1120, reconciling Cramer's book and taxable…
.