Brent, Matt, Chris, Brad, and Anwer are five unrelated shareholders who each owns 20 of the 100 outstanding shares of Aggie Corporation. On June 30 of this year, Aggie distributed $100,000 in cash to the shareholders. On September 30 of this year, Aggie redeemed all of Anwer's shares for $80,000. Aggie had $45,000 of accumulated E&P at the beginning of the year and reported $120,000 of current E&P at year-end. What is Aggie's accumulated E&P at the beginning of next year? Consult Revenue Rule 74-338 (Hint: Determine the tax status of the redemption and then calculate the effect of the June distribution on current E&P) (Negative amount should be indicated with a minus sign.) Current E&P Less dividends paid Undistributed Current E&P Prorated Undistributed Current E&P at 9/30 Add Accumulated E&P at the beginning of year Total Accumulated E&P at 9/30 Reduce Accumulated E&P by Add current E&P in 4th quarter Accumulated E&P at beginning of next year $
Brent, Matt, Chris, Brad, and Anwer are five unrelated shareholders who each owns 20 of the 100 outstanding shares of Aggie Corporation. On June 30 of this year, Aggie distributed $100,000 in cash to the shareholders. On September 30 of this year, Aggie redeemed all of Anwer's shares for $80,000. Aggie had $45,000 of accumulated E&P at the beginning of the year and reported $120,000 of current E&P at year-end. What is Aggie's accumulated E&P at the beginning of next year? Consult Revenue Rule 74-338 (Hint: Determine the tax status of the redemption and then calculate the effect of the June distribution on current E&P) (Negative amount should be indicated with a minus sign.) Current E&P Less dividends paid Undistributed Current E&P Prorated Undistributed Current E&P at 9/30 Add Accumulated E&P at the beginning of year Total Accumulated E&P at 9/30 Reduce Accumulated E&P by Add current E&P in 4th quarter Accumulated E&P at beginning of next year $
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter13: Corporations: Earning & Profits And Distributions
Section: Chapter Questions
Problem 40P
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Transcribed Image Text:Brent, Matt, Chris, Brad, and Anwer are five unrelated shareholders who each owns 20 of the 100 outstanding shares of Aggie
Corporation. On June 30 of this year, Aggie distributed $100,000 in cash to the shareholders. On September 30 of this year, Aggie
redeemed all of Anwer's shares for $80,000. Aggie had $45,000 of accumulated E&P at the beginning of the year and reported
$120,000 of current E&P at year-end. What is Aggie's accumulated E&P at the beginning of next year? Consult Revenue Rule 74-338
(Hint: Determine the tax status of the redemption and then calculate the effect of the June distribution on current E&P) (Negative
amount should be indicated with a minus sign.)
Current E&P
Less dividends paid
Undistributed Current E&P
Prorated Undistributed Current E&P at 9/30
Add Accumulated E&P at the beginning of year
Total Accumulated E&P at 9/30
Reduce Accumulated E&P by
Add current E&P in 4th quarter
Accumulated E&P at beginning of next year
$
0
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