Exercise 18-24 (Algorithmic) (LO. 5) On January 2, Chaz transfers cash of $79,000 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $19,750. The income is credited to its earnings and profits account. The corporation distributes $5,925 to Chaz. If an amount is zero, enter "0". a. How do Chaz and the corporation treat the $5,925 distribution? Chaz has a of $ and the corporation has a deduction of $ b. Assume instead that Chaz transfers to the corporation cash of $39,500 for stock and cash of $39,500 for a note of the same amount. The note is payable in equal annual installments of $3,950 and bears interest at the rate of 6%. No distributions are made during the year to Chaz. However, at the end of the year, the corporation pays an amount to meet the loan obligation (i.e., the annual $3,950 principal payment plus the interest due). Determine the total amount of the payment and its tax treatment to Chaz and the corporation. The corporate payment to Chaz totals $ of which $ Chaz has interest of $ and a note repayment of is taxable to Chaz. The corporation has a deduction of $ Exercise 18-24 (Algorithmic) (LO. 5) On January 2, Chaz transfers cash of $79,000 to a newly formed corporation for 100% of the stock. In its initial year, the corporation has net income of $19,750. The income is credited to its earnings and profits account. The corporation distributes $5,925 to Chaz. If an amount is zero, enter "0". a. How do Chaz and the corporation treat the $5,925 distribution? Chaz has i b. Assum The note is return of capital taxable dividend of $ and the corporation has a deduction of $ ansfers to the corporation cash of $39,500 for stock and cash of $39,500 for a note of the same amount. ual installments of $3,950 and bears interest at the rate of 6%. No distributions are made during the year to Chaz. However, at the end of the year, the corporation pays an amount to meet the loan obligation(i.e., the annual $3,950 principal payment plus the interest due). Determine the total amount of the payment and its tax treatment to Chaz and the corporation. The corporate payment to Chaz totals $ of which $ . Chaz has interest of $ and a note repayment of is taxable to Chaz. The corporation has a deduction of $