What amount of dividend income and/ or capital gain will Ellyn recognize as a result of the cash distribution ?
What amount of dividend income and/ or capital gain will Ellyn recognize as a result of the cash distribution ?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020 EA Inc makes an S Corporation election. EA Inc has been operated as a C Corporation for several years and had E &P of $50,000 at January 1, 2020. Ellyn, the sole shareholder has a tax basis in her shares of EA Inc of $100,000 on January 1, 2020. During 2020, EA Inc has taxable income of $250,000. On December 31, 2020 EA Inc distributes $600,000 to Ellyn. What amount of dividend income and/ or
A. No dividend income or gain
OB. Dividend income $50,000; capital gain $200,000
O C. Capital gain of $250,000
OD. $50,000 dividend income
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