Question
This problem is from Federal income taxation of Corporations and Shareholder 7th edition (James S. Eustice) 5A (9) The stock of X is owned equally
This problem is from Federal income taxation of Corporations and Shareholder 7th edition (James S. Eustice) 5A (9)
The stock of X is owned equally by two shareholders: Y (an individual with a stock basis of $100) and A (an individual with stock basis of $40). X uses the accrual method, A and Y use the cash method, and all use the calendar year. (Assume 1059 does not apply). Use a 34% corporate tax rate in this problem. X has always been an S corporation. During the current year, X accrued income and expenses as follows:
Gross income from Busines $500
Dividends on AT&T stock (consider &243) $100
Interest on municipal bonds (&103) 100
Capital gain 100
Total $800
Deductible &162(a)(1) business expense 430
Noncaptial expenses not deductible under &162(e) 90
Capital losses (see &1211 (a) 146
Total 66
Net $134
Suppose that Y is an individual and that X has always been an S Corporation.
a) What is X's E&P?
For the answer can you please explain how do you get the result.
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