This year, Sooner Company reports a deficit in current E&P of ($424,000). Its accumulated E&P at the beginning of the year was $354,000. Sooner distributed $708,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock before the distribution is $122,500. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a. How much of the $708,000 distribution is treated as a dividend to Boomer? b. What is Boomer’s tax basis in his Sooner stock after the distribution? c. What is Sooner’s balance in accumulated E&P on the first day of next year?
This year, Sooner Company reports a deficit in current E&P of ($424,000). Its accumulated E&P at the beginning of the year was $354,000. Sooner distributed $708,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock before the distribution is $122,500. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a. How much of the $708,000 distribution is treated as a dividend to Boomer? b. What is Boomer’s tax basis in his Sooner stock after the distribution? c. What is Sooner’s balance in accumulated E&P on the first day of next year?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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This year, Sooner Company reports a deficit in current E&P of ($424,000). Its accumulated E&P at the beginning of the year was $354,000. Sooner distributed $708,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock before the distribution is $122,500. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.)
a. How much of the $708,000 distribution is treated as a dividend to Boomer?
b. What is Boomer’s tax basis in his Sooner stock after the distribution?
c. What is Sooner’s balance in accumulated E&P on the first day of next year?
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