3. Ridge Corp., a calendar year C corporation, made a nonliquidating cash distribution to its shareholders of
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3. Ridge Corp., a calendar year C corporation, made a nonliquidating cash distribution to its shareholders of $1,000,000 with respect to its stock. At that time, Ridge’s current and accumulated earnings and profits totaled $750,000 and its total paid-in capital for tax purposes was $10,000,000. Ridge had no corporate shareholders.
Ridge’s cash distribution:
I. Was taxable as $750,000 in dividend income to its shareholders.
II. Reduced its shareholders’ adjusted bases in Ridge stock by $250,000.
a. I only
b. II only
c. Both I and II
d. Neither I nor II
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Related Book For
Essentials Of Taxation Individuals And Business Entities
ISBN: 233160
1st Edition
Authors: Nellen/Young/Raabe/Maloney
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