1. LO.1 At the beginning of the year, Myrna Corporation (a calendar year taxpayer) holds E &...

Question:

1. LO.1 At the beginning of the year, Myrna Corporation (a calendar year taxpayer)

holds E & P of $32,000. The corporation generates no additional E & P during the year. On December 31, the corporation distributes $50,000 to its sole shareholder, Abby, whose stock basis is $10,000. How does the Federal income tax law treat this distribution?

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