Neil Gonzales, ACCT 420-V3WW, Assignment 4-2 Final

Neil Gonzales, ACCT 420-V3WW, Assignment 4-2 Final - Neil...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Neil Gonzales Assignment 4-2 Chapter 19 Practice Problems 10 points Due: May 22 Purpose To assess your ability to: calculate earnings and profits allocate earnings and profits in corporate distributions relate earnings and profits and the role earnings and profits play in an organization determine the tax impact on property dividends, stock dividends, stock rights, and constructive dividends L 3 Traits Action Items 1. Complete problems 30, 33, 36, 40, 41, 45, 47, and 51 in Chapter 19 of West Federal Taxation . Chapter 19: For Week 4 Assignment 4-2 you only need work problems 30, 33 and 51. 30. At the start of the current year, Capon Corporation (a calendar year taxpayer) has accumulated E&P of $220,000 ($110,000 each) to its equal shareholders, Tammy and Mark. Their basis in the stock is $4,000 for Tammy and $16,000 for Mark. How is the distribution treated for tax purposes? 30. For tax purposes, Mark and Tammy would have a dividend income of $100,000 [($120,000 accumulated E&P + $80,000 current E&P) / 2], which would be taxed at 15%/ 0% tax rate. The $20,000 of the $220,000 accumulated E&P would reduce both of their bases to $10,000 each. In addition, the remaining amount would be considered capital gain. In the end, Mark would reduce his stock basis to $6,000 [$16,000 (basis in the stock) - $10,000] and would have no income tax consequences. For Tammy, she would reduce
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern