Lily is the sole shareholder of Crimson Corporation (a C corporation). At a time when Crimson has a deficit in accumulated E & P of $90,000 and current E & P of $65,000, it distributes a cash dividend of $85,000. If Lily's basis in her stock is $15,000, what are the tax consequences of the distribution to Lily and Crimson? a. How is the $85,000 cash dividend taxed to Lily? Dividend Income Return of Capital Capital Gain
Lily is the sole shareholder of Crimson Corporation (a C corporation). At a time when Crimson has a deficit in accumulated E & P of $90,000 and current E & P of $65,000, it distributes a cash dividend of $85,000. If Lily's basis in her stock is $15,000, what are the tax consequences of the distribution to Lily and Crimson? a. How is the $85,000 cash dividend taxed to Lily? Dividend Income Return of Capital Capital Gain
Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation
Section: Chapter Questions
Problem 40P
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT