runs al 2007 ishonor azt +J ubang-x Sride poop nim 6 On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated E & P of $350,000. Its current E&P for the year is $10,000 (before considering dividend distributions). During the year, Tulip distributes $600,000 ($300,000 each) to its equal shareholders, Anne and Tom. Anne has a basis in her stock of $50,000, while Tom's basis is $140,000. What is the effect of the distribution by Tulip Corporation on Anne and Tom? E&P=350000+10000, each gets 180,000 Ann Tom 180,000 120,000 dend 180,000 ning Distr. 120,000 50,000 of Capital 50000 140,000 120000 0 20,000 Pasis 120,000 Basis 140,000 Dividend 180,000 Remaining Distr. 120,000 50,000 Return of Capital 50000 Ending Basis 0 Capital Gain 120,000-50000 120000 20,000 Dividend income - 350,000+ 10000 = 360000 ach - 360oo0 - 180,000 remaining 600,000-360,000 - 240,000 Treated as capital gain. 2