Panther Corporation reported taxable income of $750,000 from operations this year. During the year, the company made a distribution of land to its sole shareholder, Sam Panetto. The land’s fair market value was $100,000 and its tax and E&P basis to Panther was $167,000. Sam assumed a mortgage attached to the land of $20,000. The company had accumulated E&P of $1,000,000 at the beginning of the year. The federal tax rate is 21%. a. Compute Panther’s total taxable income and federal income tax. b. Compute Panther’s current E&P. c. Compute Panther’s accumulated E&P at the beginning of next year. d. What amount of dividend income does Sam report as a result of the distribution. e. What is Sam’s tax basis in the land he received from Tiger?
Panther Corporation reported taxable income of $750,000 from operations this year. During the year, the company made a distribution of land to its sole shareholder, Sam Panetto. The land’s fair market value was $100,000 and its tax and E&P basis to Panther was $167,000. Sam assumed a mortgage attached to the land of $20,000. The company had accumulated E&P of $1,000,000 at the beginning of the year. The federal tax rate is 21%.
a. Compute Panther’s total taxable income and federal income tax.
b. Compute Panther’s current E&P.
c. Compute Panther’s accumulated E&P at the beginning of next year.
d. What amount of dividend income does Sam report as a result of the distribution.
e. What is Sam’s tax basis in the land he received from Tiger?
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