Question
Corporation A distributed property with a fair market value of $100,000 and an adjusted basis of $70,000 to James. Prior to the distribution, Corporation A
Corporation A distributed property with a fair market value of $100,000 and an adjusted basis of $70,000 to James. Prior to the distribution, Corporation A had a deficit in accumulated earnings and profits of $400,000 and current earnings and profits of $10,000. James has stock basis Corporation A of $80,000.
1. How much of this distribution is dividend, return or capital, and capital gain.
2. Assume that James is an individual in the 37% tax bracket. Determine James’ tax liability for this distribution.
3. Assume instead that James is a C corporation (James, Inc.) and that James, Inc. has a 25% interest in ZZZ. Determine the tax liability of James, Inc. on this distribution of property.
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Fundamentals Of Taxation 2015
Authors: Ana Cruz, Michael Deschamps, Frederick Niswander, Debra Prendergast, Dan Schisler, Jinhee Trone
8th Edition
1259293092, 978-1259293122, 1259293122, 978-1259293092
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