Question
NOTE: ONLY ANSWER PART C IN DETAIL. explain how you got the numbers. Whether Corporation is owned by John Smith, its sole shareholder. John has
NOTE: ONLY ANSWER PART C IN DETAIL. explain how you got the numbers.
Whether Corporation is owned by John Smith, its sole shareholder. John has a $20,000 basis in his Whether Corporation stock. John is in the 37% tax bracket. Whether Corporation is in the 21% tax bracket.
Whether Corporation has the following balances as of December 31, 2021.
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Accumulated Earnings and Profits (AEP) ($500,000)
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Current Earnings and Profits $ 80,000
On December 31, 2021, Whether Corporation distributes $160,000 to John.
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What are the tax consequences to John from receiving this distribution from Whether Corporation?
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How would your answer above be different if instead Whether Corporation had the following balances:
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Accumulated Earnings and Profits (AEP) $400,000
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Current Earnings and Profits (350,000)
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Assume that John still receives a distribution of $160,000 and has stock basis of $20,000
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Use the facts in part a, but assume that rather than cash, John received an asset with a fair market value of $160,000 and a basis to the corporation of $120,000.
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How much tax would John owe from this distribution?
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What are the tax implications to Whether Corporation? (This is tricky).
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NOTE: ONLY ANSWER PART C IN DETAIL
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