Prob 1
In each of the following independent situations, indicate taxable distribution and
Accumulated
Beginning of year
Current
E&P
Year End
Distribution
a
$40,000
$0
$40,000
b
$0
$40,000
$80,000
c
$20,000
$10,000
$30,000
d
$50,000
-$10,000
$60,000
e
-$20,000
$60,000
$60,000
Prob 2
Taxable Return of
Amount Capital
XYZ corporation (E & P $1,000,000) distributes machinery, adjusted basis $40,000
Fair Market Value of $160,000 to sole shareholder. The property is subject to
Liability of $40,000 which shareholder assumes
(A)
How much dividend Johnson report
(B)
What is his basis in the machinery
What is the effect on corporation's earnings and E & P