# Describe the effect of a \$100,000 cash distribution paid on January 1 to the sole shareholder of a calendar year corporation whose stock basis is \$25,000 when the corporation has

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Describe the effect of a? \$100,000 cash distribution paid on January 1 to the sole shareholder of a calendar year corporation whose stock basis is? \$25,000 when the corporation has

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Describe the effect of a? \$100,000 cash distribution paid on January 1 to the sole shareholder of a calendar year corporation whose stock basis is? \$25,000 when the corporation has

 ?\$100,000 of current? E&P and? \$100,000 of accumulated? E&P A? \$50,000 accumulated? E&P deficit and a? \$60,000 current? E&P balance A? \$60,000 accumulated? E&P deficit and a? \$60,000 current? E&P deficit An? \$80,000 current? E&P deficit and a? \$100,000 accumulated? E&P balance

Answer Parts a through d? again, assuming instead that the corporation makes the distribution on October 1 in a nonleap year.

1. Describe the effect of a? \$100,000 cash distribution paid on January 1 to the sole shareholder of a calendar year corporation whose stock basis is? \$25,000 when the corporation has? \$100,000 of current? E&P and? \$100,000 of accumulated? E&P.

The distribution is a? \$100,000 dividend payable out of current? E&P.

?First, \$25,000 is a return of capital that reduces the? shareholder's stock basis to zero. The remaining? \$75,000 is a capital gain.

The dividend is a? \$100,000 dividend payable out of accumulated? E&P.

?First, \$25,000 is a return of capital that reduces the? shareholder's stock basis to zero. The remaining? \$75,000 is ordinary income.

1. Describe the effect of a? \$100,000 cash distribution paid on January 1 to the sole shareholder of a calendar year corporation whose stock basis is? \$25,000 when the corporation has a? \$50,000 accumulated? E&P deficit and a? \$60,000 current? E&P balance.

?First, \$15,000 is a return of capital that reduces the? shareholder's stock basis to zero.? Second, \$60,000 of the distribution is ordinary income from current? E&P. Third, the remaining? \$25,000 is a capital gain. The? \$50,000 accumulated? E&P deficit remains.

?First, \$25,000 is a return of capital that reduces the? shareholder's stock basis to zero.? Second, \$85,000 of the distribution is ordinary income from current? E&P. The? \$50,000 accumulated? E&P deficit remains.

?First, \$25,000 is a return of capital that reduces the? shareholder's stock basis to zero.? Second, \$60,000 of the distribution is ordinary income from current? E&P. Third, the remaining? \$15,000 is a capital gain. The? \$50,000 accumulated? E&P deficit remains.

?First, \$60,000 of the distribution is a dividend from current? E&P. Second,? \$25,000 is a return of capital that reduces the? shareholder's stock basis to zero.? Third, the remaining? \$15,000 is a capital gain. The? \$50,000 accumulated? E&P deficit remains.

1. Describe the effect of a? \$100,000 cash distribution paid on January 1 to the sole shareholder of a calendar year corporation whose stock basis is? \$25,000 when the corporation has a? \$60,000 accumulated? E&P deficit and a? \$60,000 current? E&P deficit.
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