R Corporation has a negative current earnings and profits for tax year 20X7 of $15,000. Accumulated earnings and profits as of the beginning of 20X7 equal $10,000. On June 1, 20X7, R Corporation distributes $6,000 cash to its sole shareholder Y, whose basis in the stock is $2,000. What is the amount of dividend income that Y must report for the year (if zero, write zero as the answer)? Do any allocations on a per-month basis instead of a per-day basis.

R Corporation has a negative current earnings and profits for tax year 20X7 of $15,000. Accumulated earnings and profits as of the beginning of 20X7 equal $10,000. On June 1, 20X7, R Corporation distributes $6,000 cash to its sole shareholder Y, whose basis in the stock is $2,000. What is the amount of dividend income that Y must report for the year (if zero, write zero as the answer)? Do any allocations on a per-month basis instead of a per-day basis.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter14: Choice Of Business Entity—operations And Distributions

Section: Chapter Questions

Problem 49P

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Question

R Corporation has a negative current earnings and profits for tax year 20X7 of $15,000.

Accumulated earnings and profits as of the beginning of 20X7 equal $10,000.

On June 1, 20X7, R Corporation distributes $6,000 cash to its sole

shareholder Y, whose basis in the stock is $2,000.

What is the amount of dividend income that Y must report for the year (if zero, write zero as the answer)?

Do any allocations on a per-month basis instead of a per-day basis.

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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