Manistee Corporation reported taxable income of $1,200,000 this year and paid federal income taxes of $408,000. Not included in the computation was disallowed entertainment expenses of $25,000, tax-exempt interest of $20,000, and a net capital loss of $50,000 incurred this year. Manistee is an accrual basis taxpayer. The corporations current earnings and profits this year would be: Multiple Choice

$1,200,000

$1,145,000

$787,000

$737,000

Boulder Company reports current E&P of $500,000 this year and accumulated negative E&P at the beginning of the year of $200,000. Boulder distributed $400,000 to its sole shareholder on December 31 of this year. How much of the distribution is treated as a dividend this year? Multiple Choice

$400,000

$200,000

$300,000

$0

Force Corporation is owned equally by Luke and his sister Leia, each of whom own 200 shares in the company. Force redeemed 100 shares of Lukes stock in the company on December 31 of this year paying Luke $1,000 per share. Lukes income tax basis in each share is $500. Force has total E&P of $800,000. What are the tax consequences to Luke as a result of the stock redemption? Multiple Choice

$50,000 capital gain and a tax basis in each of his remaining shares of $500.

$50,000 capital gain and a tax basis in each of his remaining shares of $1,000.

$100,000 dividend and a tax basis in each of his remaining shares of $500. $100,000 dividend and a tax basis in each of his remaining shares of $1,000.