The tax treatment of corporate distributions at the shareholder


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The tax treatment of corporate distributions at the shareholder level does not depend on The basis of stock in the hands of the shareholder. The earnings and profits of the corporation. The character of the property being distributed. Whether the distributed property is subject to a liability. Any of the above. A corporation sells property (basis $50,000) to its sole shareholder for $35,000, the fair market value of the property. With respect to the sale, The corporation has a tax loss of $15,000. The shareholder has a constructive dividend of $15,000. The shareholder has a basis of $50,000 in the property. The corporation does not recognize a tax loss but reduces its E&P account by $15,000. None of the above statements are correct. Marigold Corporation, a calendar year taxpayer, has taxable income of $225,000 for the year. In reviewing Marigold’s financial records you discover the following occurred this year. Federal income taxes paid                                            $ 35,000 Capital loss carryforward deducted currently                                             25,000 Gain from property sold this year using the installment method ($7,000 of the gain was recognized currently)                                 34,000 Depreciation deducted on tax return (ADS depreciation would have been $12,000)                                                 8,000 70% dividends received deduction                                           42,000 Marigold Corporation’s current E&P is $232,000 $253,000 $280,000 $300,000 None of the above. Warbler Corporation, a calendar year taxpayer, has taxable income of $145,000 for the current year. Among its transactions for the year are the following Federal income tax refund                               $20,000 Section 179 expense deducted                           19,000 Related party loss                                                  11,000 Realized gain from qualified like-kind exchange but gain not recognized                                  7,000 Warbler Corporation’s current E&P is $161,000 $176,200 $154,000 $169,200 None of the above Bluebird Corporation has a deficit in accumulated E&P of $180,000. For 2014, it has current E&P of $120,000. On December 31, 2015, Bluebird distributes $135,000 to its sole shareholder, Cameron. Cameron has a basis of $60,000 in his stock in Bluebird Corporation. As a result of the distribution, Cameron has dividend income of $135,000. Cameron has dividend income of  $60,000 and reduces his stock basis to zero, and has a capital gain of $15,000. Cameron has dividend income of $120,000 and reduces his stock basis to $45,000. Cameron has no dividend income [because netting AEP and CEP yields negative amount][because netting AEP and CEP yileds 0300,000hs] = $5,330k and debt. as equity rather than debterest income to dividend income t, reduces his stock basis to zero, and has a capital gain of $75,000. None of the above statements are correct. On January 1, Iris Corporation (a calendar year taxpayer) has AEP of $95,000. During the year, Iris incurs a net loss of $120,000 from operations that accrues ratably. On June 30, Iris distributes $50,000 to Jodi (an individual), its sole shareholder. Jodi’s basis in her Iris stock is $20,000. How much of the $50,000 is dividend income for Jodi? $0. $35,000. $50,000. $30,000. None of the above. Which one of the following statements is true? A corporation that distributes a property dividend must reduce its E&P by the adjusted basis of the property. A constructive dividend must satisfy the legal requirements of a dividend as set forth by applicable state law. Constructive dividends have no effect of a distributing corporation’s E&P. The amount of dividend income recognized by a shareholder from a property distribution is always reduced by the amount of liabilities assumed by that shareholder. None of the above statements are true. In the current year…

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