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W has a zero basis in his stock investment with Y Corporation, a C corporation. During the year, W receives a $50,000 cash distribution. His share of the current-year earnings and profits is a negative $30,000 and his share of the beginning-of-year accumulated earnings and profits is a negative $10,000. How does W treat the $50,000 distribution?     Taxable dividend income       Capital gain     Nontaxable return of capital       Part nontaxable return of capital and part capital gain

W has a zero basis in his stock investment with Y Corporation, a C corporation. During the year, W receives a $50,000 cash distribution. His share of the current-year earnings and profits is a negative $30,000 and his share of the beginning-of-year accumulated earnings and profits is a negative $10,000. How does W treat the $50,000 distribution?     Taxable dividend income       Capital gain     Nontaxable return of capital       Part nontaxable return of capital and part capital gain

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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W has a zero basis in his stock investment with Y Corporation, a C corporation. During the year, W receives a $50,000 cash distribution. His share of the current-year earnings and profits is a negative $30,000 and his share of the beginning-of-year accumulated earnings and profits is a negative $10,000. How does W treat the $50,000 distribution?

   

Taxable dividend income  
   

Capital gain
   

Nontaxable return of capital  
   

Part nontaxable return of capital and part capital gain
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