Two Hearts Corporation is a calendar year taxpayer. Jane owns all of its stock. Her basis for the stock is $5,000. On April 1 of the current (non-leap) year

Two Hearts distributes $60,000 to Jane.

Requirement

Determine the tax consequences of the cash distribution in each of the following independent situations:

a.

Current E&P of $28,000; accumulated E&P of $15,000.

b.

Current E&P of $38,000; accumulated E&P of $(24,000).

c.

Current E&P of $(73,000); accumulated E&P of $50,000.

d.

Current E&P of $(16,000); accumulated E&P of $(15,000).

	A	B	C	D
Distribution
Dividend Income
Remaining Distribution
Return of Capital
Capital gain (loss)
Carryforward Accumulated E and P