CT6-Opt1 -1Question: Determine the tax treatment of each distribution above as either a dividend distribution, an exchange, or return of capital.Explain the tax rule that justifies and supports the determination made for each distribution.What is Thunder Inc.'s accumulated E&P at December 31,2018Scenario:Thunder Incorporated has issued 2000 shares of one class of common stocks. These shares are outstanding throughout 2018 and areowned as follows:Isaac Newton-800 shares, Ben Newton (son of Isaac)-400 shares, Mary Newton (daughter of Isaac)-400 shares, Sam Melvin-400shares, for a total of 2000 shares.Thunder Incorporated's reported current Earnings and Profit of $600,000 in 2018, and accumulated Earnings and Profits of $1,000,000at the beginning of 2018. The corporation made the following distributions to its shareholders:03/31/2018: It distributed $20/share to each shareholder or $40,000 in total ($20 x 2000).06/30/2018: It bought back 400 shares of Isaac's stock for $400,000 with a corresponding basis at the time of $200,000.09/30/2018: Redeemed 120 shares of Sam's stock for $120,000 with a basis of $72,000 for all 120 shares.12/21/2018: It distributed $20/share to each shareholder for a total of ($29,600 in total).

1. In tax rule dividend distribution paid 10% dividend tax and company obligation with hold…

Determine the tax treatment of each distribution above as e ax rule that justifies and supports the determination made fo nder Inc.'s accumulated E&P at December 31,2018 orporated has issued 2000 shares of one class of common st

Determine the tax treatment of each distribution above as e ax rule that justifies and supports the determination made fo nder Inc.'s accumulated E&P at December 31,2018 orporated has issued 2000 shares of one class of common st

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

Property dividends KAKAYANIN Company owns 15% of the outstanding ordinary shares of KHO Corp. On November 1, 2021, KHO declared its inventory as property dividends. Data relating to the fair values of the inventory follow: Date Total Fair Values of Property Dividends November 1, 2021 250,000 December 31, 2021 450,000 February 15, 2022 410,000 How much is the dividend income to be recognized in 2021? Prepare all the necessary entries at the date of declaration, date of record and date of payment.
Company P acquired 90 percent of the common stock of Company S on 1/1/2020. During 2020, Company S reported a net income of $50,000 and dividends of $12,000. Company P uses the simple equity method to account for the investment in S. Which of the following entries is prepared by Company P when consolidating the financial statements for 2020? Debit Subsidiary Income $45,000, Credit Investment in S $45,000 Debit Investment in S $45,000, Credit Subsidiary Income $45,000 Debit Dividends Receivable $10,800, Credit Subsidiary Income $10,800 Debit Subsidiary Income $10,800, Credit Dividends Declared $10,800
Bravery Pte Ltd, was incorporated on 16 January 2019 as a manufacturing company with an accounting year end of 31 December. It is wholly owned by XYZ Ltd. It has a chargeable income before exempt income of $1,000,000 for the year ended 31 December 2021. Calculate its net tax payable for Year of Assessment 2022. 1) $120,575 2) $148,750 3) $144,075 4) $152,575
The "other income" section of A Company's Statement of Comprehensive Income contains P5,000 in interest income, P15,000 equity in B Co. earnings, and P25,000 gain on sale of available-for-sale securities. Assuming the sale of the securities increased the current portion of income tax expense by P10,000, determine the amount of A's reclassification adjustment to other comprehensive income.
Jacob Mills has provided you with the following information: 2019 2020 2021 Taxable capital gains on sale of qualified small business corporation shares . . . . . . . . . . . . . . . . . . . . . $75,000 - $300,000 Business investment loss (before ssec. 39(9) adjustment) - - 160,000 Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . .. - $1,200 2,400 Grossed-up taxable dividends . . . . . . . . . . . . . . . . . .. - 240 - Net rental income (loss) . . . . . . . . . . . . . . . . . . . . . . . - (1300) (320) Carrying charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 3,075 - The 2019 taxable capital gain was fully offset by a capital gains deduction in that year. —REQUIRED Determine Jacob’s capital gains deduction for 2021 supported by all the necessary calculations. Assume that there were no other capital transactions before 2019.
(2) Fortune, Inc. uses the accrual method of accounting. What is Fortune's earnings and profits as of January 1, 2020, assuming its opening 2019 E&P was $50,000, it distributed $29,000 to its shareholders in 2019, its 2019 taxable income was equal to $25,000 and that it has the following items of income and expense for the year 2019: Net operating loss carryover 2,500 ... § 243 dividend received exclusion (5% interest in stock of payor).. Contributions in excess of 10% corporate limitation Federal Income tax for TYE 12/31/19 Excess of capital losses over capital gains Interest Income from Tax-exempt municipal bond NYC moving violation and parking tickets Current year Section 179 deduction ....... 2,500 8,000 1,000 2,100 1,500 4,300 7.400 9,000
Edmonton corp. is Canadian Controlled Private Corp. It has Dec 31 year-end. The following information relates to its 2020 Taxation y Taxable income amount of $135,000 Non-eligible dividend paid to shareholders during the year of 2020, amount of $40,000; Dividend refund for 2019 amount of $23,700 (from non-eligible) Non-eligible dividend received from Canadian corporations $30,000 Non-eligible Refundable Dividend Tax on Hand balance at Dec 31, 2019 balance of $3,920 Aggregate Investment Income amount of $27,000 Amount eligible for small business deduction $105,000 (tax reduction SBD 19,950) Part I tax payable $56,000 Based on the above, what is the balance of non-eligible Refundable Dividend Tax On Hand (RDTOH) at Dec 31, 20207
York Corporation declares a property dividend on June 30, payable in bonds of Laurens Company, which are classified as “available for sale.” The bonds are recorded at a fair value of $58,000 (there is a $0 balance in Allowance for Change in the Value of Investment in Available-for-Sale Securities), but at the time of the property dividend have a current value of $67,000. Prepare the journal entries to record the declaration of this property dividend.
The adjusted trial balance for the year of SNEED Corporatioon attached in ss blow thanks for help apoprecaited rwohwtkhpotw pwtkoj
Marcia Itd declared a divident in august 2021 of $37500. In febuary 2022 stan Itd paid an interim divident of $22500 and marcia Itd paid an interim divident of $11250. At the 30th june 2020 there were intercompany accounts balance of $125000. marcia Ite rented a warehouse from stan Itd and paid annual rent of $35000 to stan Itd. Prepare the consolidated journal entries at 30th june 2022 to elimunate the intragroup items
Hh3.
Assume that Puritan Corporation operates in an industry for which NOL carryback is allowed. Puritan Corporation reported the following pretax accounting income and taxable income for its first three years of operations: 2023 $ 348,000 2024 (534,000) 2025 765,000 Puritan's tax rate is 25% for all years. Puritan elected a loss carryback. As of December 31, 2024. Puritan was certain that it would recover the full tax benefit of the NOL that remained after the operating loss carryback. What would Puritan report as net income for 2025? Multiple Choice $623.554 $573,750 $143,448 $621,562