Use the following information to answer the questions

Bee bop corp. had a taxable income of $60,000 for its initial taxable year. A review of company records revealed the following information:

1. Bee bop has tax-exempt interest income of $22,000

2. Bee bop had $20,000 of returns and allowances that were deducted on the return.

3. Bee bop paid $100,000 in dividends

4. Bee bop reported a $20,000 gain on an installment sale of a noninventory item. The total gain on the sale was $100,000

5. Accumulated E&P is $5,000

Questions:

1. What are Bee bop's current E&P? a. ($98,000) b. $62,000 c. $82,000 d. $42,000

2. If Dana has a stock basis of $25,000 and is a 50% owner in Bee bop, how is the $100,000 of Bee bop dividends taxed to Dana? a. $50,000 Dividend b. $50,000 Capital Gain c. $100,000 Return of Capital d. $100,000 Dividend

3. What is Dana's basis in her stock after the dividend distribution? a. $0 b. $25,000 c. $75,000 d. $125,000

4. Is Bee bop able to deduct this dividend on their tax return? a. Yes b. No