Tar Heel Inc. pays $100,000 of dividends in 2012, with $25,000 going to your client, Mr. Big.

Question:

Tar Heel Inc. pays $100,000 of dividends in 2012, with $25,000 going to your client, Mr. Big.
Tar Heel began 2012 with $120,000 in accumulated earnings and profits and had $10,000 of current earnings and profits in 2012. Mr. Big has a $40,000 basis in his Tar Heel stock.
a. How much income will Mr. Big report from Tar Heel in 2012? What will Mr. Big's basis in Tar Heel be after the Assume instead that Tar Heel began 2012 with a $2,000 deficit balance in its earnings and profits account, but did have $10,000 of current earnings and profits for 2012. How much income will Mr. Big report from Tar Heel in 2012?
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...