week 5 .docx - Edition 2019 26 For 2015 accumulated E&P =-10,000 For 2016 accumulated E&P =-10,000 – 6,000 – 9,000 =-25,000 For 2017 accumulated E&P

week 5 .docx - Edition 2019 26 For 2015 accumulated E&P...

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Edition 2019 26. For 2015, accumulated E&P = -10,000 For 2016, accumulated E&P = -10,000 – 6,000 – 9,000 = -25,000 For 2017, accumulated E&P = -25,000 + 11,000 – 7,000 = -21,000 For 2018, accumulated E&P = -21,000 + 11,000 – 19,000 = -25,000 The tax status are always equal to the current plus accumulated E&P. 28. a. Gross income = 500,000 + 100,000 + 30,000 + 40,000 + 200,000 = 870,000 b. Taxable income = 870,000 + 45,000 – 13,000 – 43,000 – 15,870 – 50,000 – 10,000 = 783,130 30. a. the amount of gain equal to $54,000 - $17,000 = $37,000. b. dividend equal to $54,000 - $31,000 = $23,000 c. the E&P after the distribution is $67,000 d. the shareholder’s basis in the building is $54,000. 32. a. Anne should recognize $30,000 as the dividend income. b. Tara should recognize $7,900. Dividend income is $17,000. c. Tara should recognize $60,000 as long-term capital gain. d. Tara should recognize $55,000 as gain. E&P will decrease by $75,000 excluding the taxes. e. Tara should recognize $14,000 as ordinary income. E&P will decrease by $43,000 and increase by $14,000 excluding the taxes. 38. a. no basis is allocated to the warrant, so there is nothing added to the stock. b. if Charlie exercised the warrants when the stock price was $85, then the basis of the
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  • Fall '19
  • Taxation in the United States, B. SAL

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