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On January 1, ABC Corporation (a C corporation and calendar year taxpayer) has accumulated E&P of $400000. Its current E&P for the year is $120000
On January 1, ABC Corporation (a "C" corporation and calendar year taxpayer) has accumulated E&P of $400000. Its current E&P for the year is $120000 (before considering dividend distributions). During the year, ABC distributes $800000 ($400000 each) to its equal shareholders, Mary and Larry. Mary has a basis in her stock of $95000, while Larry's basis is $160000. What is the effect of the distribution by ABC Corporation on Mary and Larry?
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