Beaver Corporation reported taxable income of $500,000 from operations this year. The company paid federal income taxes

Question:

Beaver Corporation reported taxable income of $500,000 from operations this year. The company paid federal income taxes of $105,000 on this taxable income. During the year, the company made a distribution of land to its sole shareholder, Eugenia VanDam. The land’s fair market value was $20,000 and its tax and E&P basis to Beaver was $50,000. Eugenia assumed a mortgage on the land of $25,000. Beaver Corporation had accumulated E&P of $1,500,000.
a. Compute Beaver’s taxable income and federal income tax.

b. Compute Beaver’s current E&P.

c. Compute Beaver’s accumulated E&P at the beginning of next year.
d. What amount of dividend income does Eugenia report as a result of the distribution?

Corporation
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