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