Jane is the sole shareholder of Buttons, Inc. Buttons has accumulated earnings and profits (E & P) of $65,000 at the beginning of the current year. The current E & P is $35,000. Buttons pays out a property distribution to Jane during the current year with an FMV of $150,000 and an adjusted basis of $130,000. How much is a taxable dividend to Jane?

a.$35,000

b.$100,000

c.$120,000

d.$150,000

2.

Jane is the sole shareholder of Buttons, Inc. Buttons has a deficit of $60,000 in accumulated earnings and profits (E & P) at the beginning of the current year. Current E & P is $35,000. If Buttons pays out a cash distribution to Jane during the current year of $50,000, how much is a taxable dividend to Jane?

a.$0

b.$35,000

c.$50,000

d.$85,000

3.

Ridge Corp., a calendar year C corporation, made a nonliquidating cash distribution to its shareholders of $1,000,000 with respect to its stock. At that time, Ridge's current and accumulated earnings and profits totaled $750,000 and its total paid-in capital for tax purposes was $10,000,000. Ridge had no corporate shareholders. Ridge's cash distribution:

I. Was taxable as $750,000 in dividend income to its shareholders. II. Reduced its shareholders' adjusted bases in Ridge stock by $250,000.

a.I only

b.II only

c.Both I and II

d.Neither I nor II

4.

Fox Corp. owned 2,000 shares of Duffy Corp. stock that it bought in year 0 for $9 per share. In year 8, when the fair market value of the Duffy stock was $20 per share, Fox distributed this stock to a noncorporate shareholder. Foxs recognized gain on this distribution was:

a.$40,000

b.$22,000

c.$18,000

d.$0

5.

On January 1, year 5, Olinto Corp., an accrual basis, calendar year C corporation, had $35,000 in accumulated earnings and profits. For year 5, Olinto had current earnings and profits of $15,000 and made two $40,000 cash distributions to its shareholders, one in April and one in September of year 5. What amount of the year 5 distributions is classified as dividend income to Olintos shareholders?

a.$15,000

b.$35,000

c.$50,000

d.$80,000