Problem 5-24 (Algorithmic) (LO. 1, 4)

At the start of the current year, Blue Corporation (a calendar year taxpayer) has accumulated E & P of $200,000. Blue's current E & P is $120,000, and at the end of the year, it distributes $400,000 ($200,000 each) to its equal shareholders, Pam and Jon. Pam's stock basis is $28,000; Jon's stock basis is $112,000. How is the distribution treated for tax purposes?

If an amount is zero, enter "0".

Each shareholder has dividend income of $.................. In addition, Pam has a reduction in stock basis to $.............. and a capital gain of $............. Jon has a reduction in stock basis to $...............

Feedback