Answers! 1. Beasley and LeRoy each invest $100,000 into BL Corporation (a C Corporation). Beasley and LeRoy each get a 50% interest in Bl. After several years, BL Corporation has $300,000 of Earnings and Profits. EQUIRED: A. By default, is BL a C or an S Corporation? B. BL, repurchases 50% of Beasley's stock for $125,000 and 50% of LeRoy's stock for $125,000. How much income is taxed to Beasley and Leroy and what is the character of the income assuming that the repurchase is treated as a: Stock Redemption Dividend Beasley Beasley LeRoy Le Roy C. Sometime later, BL repurchases the remaining 50% of Beasley's stock for $125,000 and the remaining 50% of LeRoy's stock for $125,000. How much income to taxed to Beasley and Leroy and what is the character of the income if the repurchase in Part B was treated as a Stock Redemption Dividend Beasley Beasley LeRoy LeRoy D. How much total income is taxed to Beasley and LeRoy in Parts B plus Cif the first repurchase is treated as a: Stock Redemption Dividend Beasley Beasley LeRoy LeRoy E. Refer to Part D. Assume that Beasley and LeRoy are high income taxpayers. Under current law, how much total tax do Beasley and LeRoy each pay if the first repurchase is treated as a: Stock Redemption Dividend F. Explain whether it matters under current law if a distribution is treated as a stock redemption or a dividend in the: a. Short term b. Long term TO G. Refer back to the first repurchase in Part B. What is the correct tax treatment (i.e., Stock Redemption or Dividend?) Answers! 1. Beasley and LeRoy each invest $100,000 into BL Corporation (a C Corporation). Beasley and LeRoy each get a 50% interest in Bl. After several years, BL Corporation has $300,000 of Earnings and Profits. EQUIRED: A. By default, is BL a C or an S Corporation? B. BL, repurchases 50% of Beasley's stock for $125,000 and 50% of LeRoy's stock for $125,000. How much income is taxed to Beasley and Leroy and what is the character of the income assuming that the repurchase is treated as a: Stock Redemption Dividend Beasley Beasley LeRoy Le Roy C. Sometime later, BL repurchases the remaining 50% of Beasley's stock for $125,000 and the remaining 50% of LeRoy's stock for $125,000. How much income to taxed to Beasley and Leroy and what is the character of the income if the repurchase in Part B was treated as a Stock Redemption Dividend Beasley Beasley LeRoy LeRoy D. How much total income is taxed to Beasley and LeRoy in Parts B plus Cif the first repurchase is treated as a: Stock Redemption Dividend Beasley Beasley LeRoy LeRoy E. Refer to Part D. Assume that Beasley and LeRoy are high income taxpayers. Under current law, how much total tax do Beasley and LeRoy each pay if the first repurchase is treated as a: Stock Redemption Dividend F. Explain whether it matters under current law if a distribution is treated as a stock redemption or a dividend in the: a. Short term b. Long term TO G. Refer back to the first repurchase in Part B. What is the correct tax treatment (i.e., Stock Redemption or Dividend?)
