Fargo Corporation distributes property (basis of $260,000 and fair market value of $310,000) to a shareholder. Fargo Corporation has sufficient E & P for its distributions. What are the tax consequences of this distribution to Fargo?
Answer to relevant QuestionsDeerwood Corporation lends its principal shareholder, Lafayette, $500,000 on July 1 of the current year. The loan is interest-free and payable on demand. On December 31, the imputed interest rules are applied. Assume that ...Sparrow Corporation (a calendar year, accrual basis taxpayer) had the following transactions in 2015, its second year of operation. Taxable income .......................... $330,000 Federal income tax liability paid ...A calendar year corporation has substantial accumulated E & P, but it expects to incur a deficit in current E & P for the year due to significant losses in the last half of the year. A cash distribution to its shareholders ...Ochre Corporation's board of directors decides to distribute property to its shareholders rather than pay a cash dividend. Why might Ochre's board make this decision? Donna and Steven own all the stock in Pink Corporation (E & P of $2 million). Each owns 1,000 shares and has a basis of $75,000 in the shares. Donna and Steven are married and have two minor children. Pink Corporation has ...
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