Cpa 02095 are may 95 25 corr ans b pm45 r 3 01 page

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Unformatted text preview: 200,000. Choice "a" is incorrect. The maximum taxable amount of a property dividend is equal to the sum of both current earnings and profits and accumulated earnings and profits (plus any gain to the corporation on the distribution itself). Choice "b" is incorrect. A dividend paid in property other than money is taxable to an individual taxpayer to the extent of the property's fair market value (not its basis). However, the taxable dividend amount is no more than the current and accumulated earnings and profits of the distributing corporation (plus any gain to the corporation on the distribution itself). Choice "c" is incorrect. This answer did not take into account the gain generated on the distribution of the appreciated property. CPA-02095 Type1 M/C A-D 32. CPA-02095 ARE May 95 #25 Corr Ans: B PM#45 R 3-01 Page 43 Jaxson Corp. has 200,000 shares of voting common stock issued and outstanding. King Corp. has decided to acquire 90 percent of Jaxson's votin...
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