Question
Nabeel purchasedalloftheADCB corporationstocksin2018for$76,000. OnDecember 31, 2019,ADCB corporation has current E&P of $15,000.and madeacashdistributionof$135,000 toNabeel. Assume that ADCB has accumulatedE&Pof $40,000,thedistributionwillbetreatedas: A.Taxabledividendof$135,000. B.Taxabledividendof$55,000andnontaxablereturnofinvestmentof $80,000. C.Taxabledividendof$55,000,nontaxablereturnofinvestmentof$76,000, andacapitalgainof$4,000.
Nabeel purchasedalloftheADCB corporationstocksin2018for$76,000.
OnDecember 31, 2019,ADCB corporation has current E&P of $15,000.and madeacashdistributionof$135,000 toNabeel. Assume that ADCB has accumulatedE&Pof $40,000,thedistributionwillbetreatedas:
A.Taxabledividendof$135,000.
B.Taxabledividendof$55,000andnontaxablereturnofinvestmentof $80,000.
C.Taxabledividendof$55,000,nontaxablereturnofinvestmentof$76,000, andacapitalgainof$4,000.
D.Taxabledividendof$55,000andcapitalgainof$80,000.
E.None of these.
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Auditing An International Approach
Authors: Wally J. Smieliauskas, Kathryn Bewley
7th edition
978-1259087462
