Illini Corporation reported taxable income of $500,000 from operations for this year. During the year, the company
Question:
Illini Corporation reported taxable income of $500,000 from operations for this year. During the year, the company made a distribution of an automobile to its sole shareholder, Carly Urbana. The auto’s fair market value was $30,000 and its tax basis to Illini was $0. The auto’s E&P basis was $15,000. Any gain from the distribution will be taxed at 21 percent. Illini had accumulated E&P of $1,500,000.
a. Compute Illini’s total taxable income and federal income tax.
b. Compute Illini’s current E&P.
c. Compute Illini’s accumulated E&P at the beginning of next year.
d. What amount of dividend income does Carly report as a result of the distribution?
e. What is Carly’s tax basis in the auto she received from Illini?
CorporationA Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Distribution
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...
Step by Step Answer:
a Taxable income from operations 500000 Gain on distribution of auto 30000 0 30000 Total taxable inc...View the full answer
Taxation Of Individuals And Business Entities 2019 Edition
ISBN: 9781259918391
10th Edition
Authors: Brian C. Spilker, Benjamin C. Ayers, John Robinson, Edmund Outslay, Ronald G. Worsham, John A. Barrick, Connie Weaver
