5 years after its formation, Up the Hill Corporation wants to pay dividends to its shareholders...

 

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5 years after its formation, Up the Hill Corporation wants to pay dividends to its shareholders Jack and JilI. On 1/1 Year 6, it has negative accumulated E&P of ($10,000) and current E&P of $50,000. It distributes a $30,000 cash dividend to Jack and a $30,000 cash dividend to Jill at end of year. 1. How much of the dividend distribution is taxable to Jack and Jill? 2. What is the effect to UTH's current E&P? QUESTION #5 5 years after its formation, Up the Hill Corporation wants to pay dividends to its shareholders Jack and Jill. On 1/1 Year 6, it has accumulated E&P of $100,000 and negative current E&P of ($50,000). It distributes a $50,000 cash dividend to Jack and a $50,000 cash dividend to Jill at end of year. 1. How much of the dividend distribution is taxable to Jack and Jill? 2. What is the effect to UTH's current E&P? 5 years after its formation, Up the Hill Corporation wants to pay dividends to its shareholders Jack and JilI. On 1/1 Year 6, it has negative accumulated E&P of ($10,000) and current E&P of $50,000. It distributes a $30,000 cash dividend to Jack and a $30,000 cash dividend to Jill at end of year. 1. How much of the dividend distribution is taxable to Jack and Jill? 2. What is the effect to UTH's current E&P? QUESTION #5 5 years after its formation, Up the Hill Corporation wants to pay dividends to its shareholders Jack and Jill. On 1/1 Year 6, it has accumulated E&P of $100,000 and negative current E&P of ($50,000). It distributes a $50,000 cash dividend to Jack and a $50,000 cash dividend to Jill at end of year. 1. How much of the dividend distribution is taxable to Jack and Jill? 2. What is the effect to UTH's current E&P?

Answer rating: 100% (QA)

Answer First things first Any distribution in excess of current accumulated EP shall not be consider... View the full answer