Question
On January 1 of the current year, Rhondell Corporation has accumulated E & P of $112,000. Current E & P for the year is $336,000,
On January 1 of the current year, Rhondell Corporation has accumulated E & P of $112,000. Current E & P for the year is $336,000, earned evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of Rhondell from January 1 to April 30. On May 1, Elizabeth sells all of her stock to Marshall. Rhondell makes two distributions to shareholders during the year: a total of $179,200 ($89,600 to Elizabeth and $89,600 to Jonathan) on April 30 and a total of $313,600 ($156,800 to Jonathan and $156,800 Marshall) on December 31.
Determine the allocation of the distributions by completing the table below. Assume that the shareholders have sufficient basis in their stock for any amount that is treated as return of capital.
If an amount is zero, enter "0". If required, round any division to two decimal places and use in subsequent computations. Round final answers to the nearest dollar.
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started