A b c d 210000 240000 275000 305000 cpa 04755

Info iconThis preview shows page 1. Sign up to view the full content.

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

Unformatted text preview: ixishere Pdf Collection Becker CPA Review, PassMaster Questions Lecture: Regulation 3 CPA-04731 Explanation Choice "d" is correct. When a corporation makes multiple distributions during the taxable year, current E&P is first allocated to each distribution on a pro rata basis; then, accumulated E&P is applied in chronological order beginning with the earliest distribution. In this example, where there are two distributions made by Bridge, the current and accumulated E&P are allocated as follows: March distribution $20,000 Current E& P - $20,000 (March distribution)/$40,000 (total distributions) x $10,000 (Current E&P) = Amount out of Current E&P $5,000 Accumulated E&P = allocate first come first serve = chronological until either Acc E&P is used up or entire distribution is dividend. Here $15,000 Accumulated E&P = $15,000 remaining distribution; thus use $0 remaining in Accumulated E&P $15,000 Entire distribution is a dividend $20,000 July distribution $20,000 Current E& P - $20,000 (July distribution)...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online