Giant Corp has accumulated E&P of $8,000 at the beginning of the current year During the year (a nonleap year), the corporation incurs a current E&P deficit of $18,250. The corporation distributes $11,000 on March 20th to Ezekiel, its sole shareholder, who has a $9,000 basis for his stock (78 days into the year would be the day before the distribution). If the exact loss cannot be determined as of the date of distribution, the treatment of the distribution will be OA) $11,000 return of capital OB) 54,100 dividend and a $6,900 capital gain. OC) $8,000 dividend and a $3,000 return of capital. OD) $4,100 dividend and a $6,900 tax free return of capital.

Giant Corp has accumulated E&P of $8,000 at the beginning of the current year During the year (a nonleap year), the corporation incurs a current E&P deficit of $18,250. The corporation distributes $11,000 on March 20th to Ezekiel, its sole shareholder, who has a $9,000 basis for his stock (78 days into the year would be the day before the distribution). If the exact loss cannot be determined as of the date of distribution, the treatment of the distribution will be OA) $11,000 return of capital OB) 54,100 dividend and a $6,900 capital gain. OC) $8,000 dividend and a $3,000 return of capital. OD) $4,100 dividend and a $6,900 tax free return of capital.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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