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ACCT TAX Combat Toys Inc. has an accumulated deficit and current E&P of $20,000. Joe Gunn, a 60 percent shareholder, withdrew $35,000 from the corporation.
ACCT TAX
Combat Toys Inc. has an accumulated deficit and current E&P of $20,000. Joe Gunn, a 60 percent shareholder, withdrew $35,000 from the corporation. Joe reported no income from the transaction, and upon audit he claimed it was a loan. No note had been executed, but on the eve of the audit, Joe signed a demand note for $35,000, payable to Combat Toys. The IRS claims Joe has a dividend of $35,000. What is the most likely result if the case goes to courtStep by Step Solution
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