Part A. The General Pattern of Section 301 and section 316 Cash Distributions ABC Corp (ABC) was formed 15 years ago by A, B & C (3 individuals). ABC uses the cash method of accounting and reports on a calendar year basis. A, B & C still own 100 shs each of the 300 shs of ABC. On 7/1 of the current year, ABC distributed $60,000.00, $20,000.00 each to A, B and C. No other distributions were made by ABC during the current year. Assume A's adjusted basis in his ABC shs is $6,000.00, B's adjusted basis in her ABC shs is $50,000.00, and C's adj. basis in his ABC shs is -0-. Unless otherwise stated, assume that the figure for "a/e&p" is the "accumulated earnings and profits" (or deficit) of ABC as of January 1 of the current year. Assume that's the figure for "c/e&p" is the "current earnings and profits" (or deficit) of ABC during the current year. Treat each situation separately and characterize the distributions to A, B & C. (a) A/e&p is $40,000.00 and c/e&p is $30,000.00. (b) A/e&p is $0 and c/e&p is $30,000.00. (c) A/e&p is $(60,000.00) and c/e&p is $30,000.00. (d) A/e&p is $(30,000.00) and c/e&p is $(30,000.00). (e) A/e&p is $45,000.00 and c/e&p is $(30,000.00). (f) In (e) above, assume that it was possible to point to a specific event in the current year which caused the current deficit. How would this affect your answer to (e)? (g) Assume that B owned half her shs with an adjusted basis of $5,000.00 and the other half with an adjusted basis of $45,000.00. How would this affect (if at all) any of your answers to (a) through (d) above? (h) In (g) above assume that B had acquired the shs with the $5,000.00 basis on 9/1 of the current year. How would this affect your answer to (g). (i) Assume that ABC had 3 classes of stock outstanding. A, B & C each owned 100% of one of the classes. A's stock is cumulative preferred stock entitled to a $20,000.00 dividend priority over any other class. B's stock, while inferior to A's is entitled to a non-cumulative preference dividend of $20,000.00 over C's common stock. ABC distributes $60,000.00 ($20,000.00 each to A, B & C) as stated above. ABC's a/e&p is $40,000.00 and its c/e&p is -0- during the current year. (j) Assume that ABC is an old corporation. It has current e&p of $10,000.00, post 1913 accumulated e&p of $30,000.00, pre 1913 accumulated e&p of $15,000.00, and it has realized a gain of $20,000.00 attributable to an increase in value which occurred before 1913. It distributes $60,000.00 ($20,000.00 each to A, B & C) on 7/1 of the present year. (k) Suppose that ABC makes 2 distributions during the current year: $48,000.00 on 3/1 and $12,000.00 on 9/1. ABC had a/e&p of $24,000.00 and c/e&p of $20,000.00. What portion of each distribution is a dividend?