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A calendar-year corporation has a $15,000 current E&P deficit and a $40,000 positive accumulated ...

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A calendar-year corporation has a $15,000 current E&P deficit and a $40,000 positive accumulated ...

A calendar-year corporation has a $15,000 current E&P deficit and a $40,000 positive accumulated E&P balance. Also assume that shareholders of the corporation have a total basis in outstanding shares of $30,000. A $75,000 distribution is made to the shareholders on the last day of the year. The tax results to the shareholders will be
A) dividend income of $25,000, a tax-free return of capital of $30,000, and capital gain of $20,000.
B) dividend income of $0, a tax-free return of capital of $30,000, and capital gain of $45,000.
C) dividend income of $25,000, a tax-free return of capital of $5,000, and capital gain of $45,000.
D) dividend income of $40,000, a tax-free return of capital of $30,000, and capital gain of $5,000.

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Prentice Hall's Federal Taxation: 2011: Individuals

Edition: 14^th

Authors: Pope, Anderson, Kramer

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Prentice Hall's Federal Taxation by Kramer

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Augustus1 Author

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We do not judge the people we love.

Prentice Hall's Federal Taxation by Kramer

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