ACCT 540

Chapter 18 Distributions Assignment

In each of the following situations complete the blanks

Distribution (cash)

S/H Basis in Stock

Corporate E&P

Dividend

Return of Capital

Capital Gain

100,000

20,000

500,000

100,000

500,000

20,000

600,000

20,000

500,000

600,000

500,000

20,000

100,000

800,000

500,000

100,000

800,000

20,000

600,000

800,000

500,000

XYZ Corporation has one shareholder.The shareholder's tax basis in his shares is $100,000.Corporate E&P BEFORE the effects of any distribution is $100,000.The corporation distributes the following property in INDEPENDENT situations.Explain the tax effect to the corporation and to the sole shareholder.

First, the corporation distributes land withaFMV of $200,000 and a tax basis to the corporation of $100,000.

Second, the corporation distributes land withaFMV of $100,000 and a tax basis to the corporation of $200,000.