In 2021, Elko, Inc. has $200,000 in accumulated earnings and profits and $(180,000) in current earning and profits. On December 31, 2021, Elko distributes $ 60,000 to Emma, an individual. Emma has stock basis of $5,000 in her Elko stock and is in the 32% tax bracket. Emma does not have any capital gains or losses from the sale of assets. How much of this distribution to Emma is dividend, return of capital, and/or capital gain?

In 2021, Elko, Inc. has $200,000 in accumulated earnings and profits and $(180,000) in current earning and profits. On December 31, 2021, Elko distributes $ 60,000 to Emma, an individual. Emma has stock basis of $5,000 in her Elko stock and is in the 32% tax bracket. Emma does not have any capital gains or losses from the sale of assets. How much of this distribution to Emma is dividend, return of capital, and/or capital gain?

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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