At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E & P of $100,000. Blue's current E & P is $60,000, and at the end of the year, it distributes $200,000 ($100,000 each) to its equal shareholders, Pooja and Jon. Pooja's stock basis is $11,000; Jon's stock basis is $26,000. How is the distribution treated for tax purposes? If an amount is zero, enter "0". Pooja has the following: Dividend income: $ Capital gain: $ Stock basis after distribution: $ Jon has the following: Dividend income: $ Capital gain: $ Stock basis after distribution:
At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E & P of $100,000. Blue's current E & P is $60,000, and at the end of the year, it distributes $200,000 ($100,000 each) to its equal shareholders, Pooja and Jon. Pooja's stock basis is $11,000; Jon's stock basis is $26,000.
How is the distribution treated for tax purposes?
If an amount is zero, enter "0".
Pooja has the following:
Dividend income: $
Stock basis after distribution: $
Jon has the following:
Dividend income: $
Capital gain: $
Stock basis after distribution:
Pooja and John has equal share in Blue Corporation.
The income from profit of business would not be considered as a capital gain as capital gain is the result of sale of an asset or an investment.
Also, income received decreases the stock basis.
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