Beaver Corporation reported taxable income of $500,000 from operations this year. During the year, the company made

Question:

Beaver Corporation reported taxable income of $500,000 from operations this year. During the year, the company made a distribution of land to its sole shareholder, Eugenia VanDam. The land’s fair market value was $20,000 and its tax and E&P basis to Beaver was $50,000. Eugenia assumed a mortgage on the land of $25,000. Any gain from the distribution will be taxed at 21 percent. Beaver had accumulated E&P of $1,500,000.

a. Compute Beaver’s total taxable income and federal income tax.

b. Compute Beaver’s current E&P.

c. Compute Beaver’s accumulated E&P at the beginning of next year.

d. What amount of dividend income does Eugenia report as a result of the distribution?

Corporation
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The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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