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Sheena Maskell Sheena Maskell
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A calendar-year corporation has a $75,000 current E&P amount in the current year, and a $25,000 positive accumulated E&P balance at the beginning of the year. Also assume that shareholders of the corporation have a total basis in outstanding shares of $40,000. A $120,000 distribution is made to the shareholders. The tax results to the shareholders will be
A) dividend income of $100,000 and capital gain of $20,000.
B) dividend income of $60,000 and capital gain of $60,000.
C) dividend income of $100,000 and no other consequences.
D) dividend income of $100,000 and a tax-free return of capital of $20,000.
Textbook 
Prentice Hall's Federal Taxation: 2011: Individuals

Prentice Hall's Federal Taxation: 2011: Individuals


Edition: 14th
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MsLippyMsLippy
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