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

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

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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 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
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This note was uploaded on 05/25/2011 for the course ACCT 420 taught by Professor Fidler during the Winter '08 term at Franklin.

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

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