Solve the problem Yellow Corporation has a deficit in accumulated E & P of $600,000 and has acurrent E & P of $450,000. On July 1, Yellow distributes $500,000 to its soleshareholder, Eugene, who has a basis in his stock of $105,000. As a result ofthe distribution, Eugene has:A. dividend income of $450,000 and no adjustment to stock basis.B. dividend income of $105,000 and reduces his stock basis to zero.C. dividend income of $450,000 and reduces his stock basis to $55,000.D. no dividend income reduces his stock basis to zero and has a capital gainof $500,000.E. None of the above.

Scenario Analysis:Yellow Corporation has an accumulated deficit in Earnings & Profits (E&P)…

Answered: Yellow Corporation has a deficit in…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter13: Corporations: Earning & Profits And Distributions

Section: Chapter Questions

Problem 19P

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Blue Corporation has a deficit in accumulated E & P of $300,000 and has current E & P of $225,000. On July 1, Blue distributes $250,000 to its sole shareholder, Sam, who has a basis in his stock of $52,500. As a result of the distribution, Sam has: Oa. Dividend income of $52,500 and reduces his stock basis to zero. Ob. Dividend income of $225,000 and no adjustment to stock basis. Oc. No dividend income, reduces his stock basis to zero, and has a capital gain of $250,000. Od. Dividend income of $225,000 and reduces his stock basis to $27,500. Oe. None of these choices are correct.
Ans
As of January 1, Cassowary Corporation has a deficit in accumulated E & P of $100,000. For the tax year, current E & P (accrued ratably) is $240,000 (prior to any distributions). On July 1, Cassowary Corporation distributes $275,000 to its sole shareholder. The amount of the distribution that is a dividend is: a. $20,000. b. $140,000. C. $240,000. d. $275,000. e. None of the above.
a) Calculate the S corporation's ordinary (non-separately stated) income and indicate which items must be separately stated b) If at the beginning of the year, Archer had a basis of 20,000 compute Archer’s basis at the end of the year. c) Assume that Voyager reported a loss of $70,000 instead (and no separately stated items or distributions). If Janeway had a basis of 10,000 in her stock at the beginning of the year, what is the amount of loss she can report on her return?
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.
Jayhawk Company reports current E&P of $452,500 and a deficit in accumulated E&P at the beginning of the year of ($412,500). Jayhawk distributed $597,500 to its sole shareholder, Christine Rock, on the last day of the year. Christine’s tax basis in her Jayhawk stock before the distribution is $98,500. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) a. How much of the $597,500 distribution is treated as a dividend to Christine? b. What is Christine’s tax basis in her Jayhawk stock after the distribution?
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Jayhawk Company reports current E&P of $310,000 and accumulated E&P of negative $282,500. Jayhawk distributed $505,000 to its sole shareholder, Christine Rock, on the last day of the year. Christine s tax basis in her Jayhawk stock is $128,750. What is Jayhawk s balance in accumulated E&P on the first day of next year?
Jayhawk Company reports current E&P of $340,000 and a deficit in accumulated E&P at the beginning of the year of ($322,500). Jayhawk distributed $405,000 to its sole shareholder, Christine Rock, on the last day of the year. Christine's tax basis in her Jayhawk stock before the distribution is $57,000. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) b. What is Christine's tax basis in her Jayhawk stock after the distribution? Tax basis
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, Soner Company reports a deficit in current E&P of ($304,000). Its accumulated E&P at the beginning of the year was $220,000. Sooner distributed $440,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer's tax basis in his Sooner stock before the distribution is $86,000. (Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.) b. What is Boomer's tax basis in his Sooner stock after the distribution? Tax basis

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