LO.1, 3 At the start of the current year, Capon Corporation (a calendar year taxpayer) has accumulated

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LO.1, 3 At the start of the current year, Capon Corporation (a calendar year taxpayer)

has accumulated E & P of $120,000. Capon’s current E & P is $80,000, and during the year, it distributes $220,000 ($110,000 each) to its equal shareholders, Tammy and Mark.

Basis in the stock before the distribution is $4,000 for Tammy and $16,000 for Mark. How is the distribution treated for tax purposes?

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South Western Federal Taxation 2011 Taxation Of Business Entities

ISBN: 9780538498616

14th Edition

Authors: James E. Smith, William A. Raabe, David M. Maloney

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