y the pending merger of Nextel and Sprint. Jackson received material non-public information from the CFO of Nextel and, in the process, violated numerous criminal and civil statutes. The SEC investigated Jackson and fined him $2,500,000. In connection with the SEC probe, Jackson hired legal counsel. His attorney's fees totaled $375,000. His attorney was also his brother. The fees paid to his brother were not reasonable. His brother would ordinarily only charge $100,000 for the legal work Jackson received - Jackson paid extra just because it was his brother. What amounts (if any) can Jackson deduct as an ordinary and necessary business expense. Banana Company reports current year E&P of $1,300,000 and accumulated E&P at the beginning of the wear of $1,200,000. Banana Company distributed $3,400,000 to its shareholders on the last day of the wear. Tax basis in her Banana stock before the distribution is $500,000. a) How much of the $3,400,000 distribution is treated as a dividend? b) What is the tax basis in Banana Company stock after the distribution (assume a single shareholder owns all stock)? c) What is Banana Company's accumulated E&P on the first day of next year? d) How much of the $3,400,000 distribution is treated as capital gain? e Cranberry Corporation reported a $25,000,000 net operating loss in 2017. It reported a net operating s of $18,000,000 in 2018. In 2019, The Cranberry Corporation reported a net income of $30,000,000. 2) How much orating to in 2017. tilined to effect toyoble income in y the pending merger of Nextel and Sprint. Jackson received material non-public information from the CFO of Nextel and, in the process, violated numerous criminal and civil statutes. The SEC investigated Jackson and fined him $2,500,000. In connection with the SEC probe, Jackson hired legal counsel. His attorney's fees totaled $375,000. His attorney was also his brother. The fees paid to his brother were not reasonable. His brother would ordinarily only charge $100,000 for the legal work Jackson received - Jackson paid extra just because it was his brother. What amounts (if any) can Jackson deduct as an ordinary and necessary business expense. Banana Company reports current year E&P of $1,300,000 and accumulated E&P at the beginning of the wear of $1,200,000. Banana Company distributed $3,400,000 to its shareholders on the last day of the wear. Tax basis in her Banana stock before the distribution is $500,000. a) How much of the $3,400,000 distribution is treated as a dividend? b) What is the tax basis in Banana Company stock after the distribution (assume a single shareholder owns all stock)? c) What is Banana Company's accumulated E&P on the first day of next year? d) How much of the $3,400,000 distribution is treated as capital gain? e Cranberry Corporation reported a $25,000,000 net operating loss in 2017. It reported a net operating s of $18,000,000 in 2018. In 2019, The Cranberry Corporation reported a net income of $30,000,000. 2) How much orating to in 2017. tilined to effect toyoble income in
