Question
At the end of 2021, Mint, Inc, had accumulated earnings and proftis (AEP) of ($210,000). During 2021, Mint, Inc. had current earnings and profits of
At the end of 2021, Mint, Inc, had accumulated earnings and proftis (AEP) of ($210,000). During 2021, Mint, Inc. had current earnings and profits of $11,000. At year end, Mint distributes an asset to Hector (the sole shareholder of Mint) with a fair market value of $80,000 and an adjusted basis of $20,000. Hectors basis in Mint stock (prior to this distribution) is $100,000. Hector has substantial income from other sources and is in the 37% tax bracket.
- Determine the tax consequences to Hector from receiving this distribution of property.
- After the distribution, what is Hectors basis in Mint, Inc. stock?
- What impact (if any) will this distribution have on Mints taxable income in 2021?
- What is the ending balance in Mints Accumulated E&P after this distribution of property?
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Ethical Obligations and Decision Making in Accounting Text and Cases
Authors: Steven Mintz, Roselyn Morris
4th edition
978-1259543470, 1259543471, 978-1259730191
