Lily is the sole shareholder of Crimson Corporation (a C corporation). At a time when Crimson has

Question:

Lily is the sole shareholder of Crimson Corporation (a C corporation). At a time when Crimson has a deficit in accumulated E & P of $100,000 and current E & P of $60,000, it distributes a cash dividend of $90,000. If Lily's basis in her stock is $10,000, what are the tax consequences of the distribution to?

a. Lily?

b. Crimson Corporation?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...