Lone Star Company is a calendar-year corporation, and this year Lone Star reported $105,000 in current E&P that accrued evenly throughout the year. At the beginning of the year, Lone Star's accumulated E&P was $12,600. At the beginning of the year, Lone Star's sole shareholder was Matt. Lone Star declared $31,500 in cash distributions on each of the following dates: March 31, June 30, September 30, and December 31. Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.

a. How much of the $126,000 in total distributions will be treated as dividends?

Answer (a)

= 105,000 + 12,600

= $117,600

b. Suppose that Matt sold half of the shares to Chris on June 1st for $40,500. How much dividend income will Matt recognize this year?

help with b and c

c. If Matt's basis in the Lone Star shares was $7,020 at the beginning of the year, how much capital gain will he recognize on the sale and distributions from Lone Star?

help with b and c