ash Distributions; Determination of Taxable Amount (LO. 1, 3)

Larry, the sole shareholder of Brown Corporation, sold his Brown stock to Ed on July 30 for $270,000. Larrys basis in the stock was $200,000 at the beginning of the year. Brown had accumulated E & P of $120,000 on January 1 and has current E & P of $240,000. During the year, Brown made the following distributions: $450,000 of cash to Larry on July 1 and $150,000 of cash to Ed on December 30.

Complete each lettered statement below by entering in the value.

a. How much of the current E & P is allocated to Larrys distribution ? $

b. How much of the current E & P is allocated to Eds distribution? $

c. How much of the $450,000 distribution is taxed as dividend income to Larry? $

d. How much of the $150,000 distribution is taxed as dividend income to Ed? $

e. Larry recognizes a capital gain of $ on the sale of the stock.