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

Question:

Tiger Corporation reported taxable income of $500,000 from operations for this year. During the year, the company made a distribution of land to its sole shareholder, Mike Fairway. The land’s fair market value was $75,000 and its tax and E&P basis to Tiger was $125,000. Mike assumed a mortgage attached to the land of $15,000. Any gain from the distribution will be taxed at 21 percent. The company had accumulated E&P of $750,000 at the beginning of the year.

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

b. Compute Tiger’s current E&P.

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

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

e. What is Mike’s tax basis in the land he received from Tiger?

Corporation
A 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...

Fantastic news! We've Found the answer you've been seeking!