Question
Corp. Z has accumulated E&P of $100,000 and current year results as follows: Shareholder Basis in Stock - $10,000 Income - $1,000,000 General Expenses -
Corp. Z has accumulated E&P of $100,000 and current year results as follows:
Shareholder Basis in Stock - $10,000
Income - $1,000,000
General Expenses - $300,000
Cost of Goods Sold - $600,000
Officer Salary - $300,000 ($200,000 reasonable)
Excessive Lease Payment to Shareholder - $50,000 (included in General Expenses) Interest from Corporate Loan to Shareholder - $10,000 below statutory benchmark. Please answer the following:
Current Loss is $__________
Total distribution amount is $__________
Total distribution from current E&P $__________
Dividend from accumulated E&P $__________
How is remainder of distribution taxed? Give Code Sections. _____________________
X Corp. (a C corporation) distributes Whiteacre to shareholders all of whom have held their shares for several years. Cost $250,000 ; FMV $1,000,000. There are no current earnings for 2022. Accumulated E&P is 0.
Basis of stock is $50,000.
Is X Corp. taxed? __________
Compute tax. $___________
Give Code Section __________
In Question above, what is the shareholder income show computations.
Are the shareholders taxed? __________
Give Code Sections with Subsections __________
Character and amount of Distribution - Show computations and all income classes.
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
Maximum tax bracket to shareholder before any surtax.
Surtax amount if threshold is exceeded. ____________
If the FMV were $200,000 is there any gain or loss to Corp. X? (If yes give amount and indicate if gain/loss) _______________
Give code section to Part f above __________
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