8. A corporation with taxable income of $150,000 paid $20,000 in federal income taxes

and had $12,000 of tax-exempt interest. It also. donated $20,000 to charity but could only

deduct $16,000 and carried the remaining $4,000 forward. What's its E&P for the year?

9. Tom owns 200 shares of X Corp and Alice owns 300 shares. The corp has $100,000

of E&P. The corp declares a stock dividend that gives each of them a choice: Tom can

take cither 20 shares or $2,000, and Alice can take either 30 shares or $3,000. Tom takes

the money and is taxed on $2,000 of dividend income. Alice takes the stock. (a) How

much dividend income does Alice have to report? (b) What is her basis in the 30 new shares?

Answer rating: 100% (QA)

To calculate the corporations EP Earnings and Profits for the year Start with taxable income 150000 ... View the full answer