LO.1, 3 Bunting Corporation and Jennifer each own 50% of Sparrow Corporations common stock. On January 1,
Question:
LO.1, 3 Bunting Corporation and Jennifer each own 50% of Sparrow Corporation’s common stock. On January 1, Sparrow has a deficit in accumulated E & P of $150,000.
Its current E & P is $65,000. During the year, Sparrow makes cash distributions of $30,000 each to Bunting and Jennifer.
a. How are the two shareholders taxed on the distribution?
b. What is Sparrow Corporation’s accumulated E & P at the end of the year?
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Related Book For 
South Western Federal Taxation 2013 Corporations Partnerships Estates And Trusts
ISBN: 9781133495574
36th Edition
Authors: William H. Hoffman, William A. Raabe, James E. Smith, David M. Maloney
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