T&T acquired R Corporation in the Type A merger that was finalized on December 31, 2017. At the time of the merger, T&T had accumulated earnings and profits of $1,100,000 and current E&P for 2017 of $150,000, and R closed its books with a negative balance of $75,000 in E&P. In 2018, the post-merger T&T had current earning and profits of $100,000. What are the balances in its accumulated E&P accounts on January 1, 2019.

3. Bumbling Corporation wants to acquire Captive Corporation in a Type B merger. However, a significant number of Captive shareholders want to sell their stock for cash. Captive has 1,000 shares of common stock outstanding. Explain the IRSs likely response to the following plans.

a. On June 1, 2017, Bumbling purchases 150 shares from Captive shareholders for cash. On September 1 of the same year, Bumbling exchanges voting stock for 750 of the remaining 850 shares.

b. Captive purchases the 150 shares of the dissenting shareholders on June 1, and Bumbling acquires 750 of the remaining shares on September 1.

c. The same as scenario b, except that Captive is short on cash, so Bumbling transfers liquid assets to Captive in order to facilitate the repurchase of shares.