View the step-by-step solution to:

Betta Inc. has 100 shares outstanding. As of January 1, 2016 Betta had 200,000 earnings and profits from prior years. On June 30, 2016 Betta paid a...

Betta Inc. has 100 shares outstanding. As of January 1, 2016 Betta had 200,000 earnings and profits from prior years. On June 30, 2016 Betta paid a dividend of 35 per share to all shareholders. Bob and his three brothers each owned 25 shares of Betta. Each invested $10,000 to start the company and made no further investment in Betta. In November 2016 Bob and his wife got divorced and he needed money to pay her settlement. To raise the cash needed bob sold 10 shares of Betta back to Betta as treasury stock. Betta gave Bob $65,000 in cash and the car he was driving, cost 62,000, fair market value, 38,000, basis $20,000. 

On December 31, 2016 when Betta closed its books for the year there was a profit of $10,000.


Compute Bob's treatment of the money he received and his basis in the remaining shares he owned.

Top Answer

Computation of Bob for treatment of money received and his basis of remaining Shares Invested in Betts Inc. Bob's initial... View the full answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.


Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online