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Kings Corporation is a calendar year taxpayer. Lou Anne owns all of its stock. Her basis for the stock is $5,000. On April 1 of

Kings Corporation is a calendar year taxpayer. Lou Anne owns all of its stock. Her basis for the stock is $5,000. On April 1 of the current (non-leap) year Kings distributes $55,000 to Lou Anne.

Requirement

Determine the tax consequences of the cash distribution in each of the following independent situations:

a. Current E&P $10,000; accumulated E&P $25,000.

b. Current E&P of $38,000; accumulated E&P of $(30,000).

c. Current E&P of $(80,000); accumulated E&P of $ 50,000.

d. Current E&P of $ (15,000); accumulated E&P of $ (15,000).

a

b

c

d

Distribution

Dividend Income

Remaining Distribution

Return of Capital

Capital gain (Loss)

Carryforward Accumulated E and P

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