Bethany owns stock in Andrew Corporation (basis of $120,000) as an investment. Andrew Corporation distributes property (FMV of $395,000; basis of $205,500) to him during the year. Andrew Corporation has current E & P of $28,000 (which includes the E & P gain on the property distribution), accumulated E & P of $105,000, and makes no other distributions during the year. What is Bethany's capital gain on the distribution?

Ava and Bella, equal shareholders in Beach Corporation, receive $480,000 each in distributions on December 31 of the current year. Beach Corp's current-year taxable income is $890,000 and it has no accumulated E & P. Last year, Beach Corp sold an appreciated asset for $990,000 (basis of $430,000). Payment for one-half of the sale of the asset was made this year. How much of Emmy's distribution will be taxed as a dividend?

Answer rating: 100% (QA)

For Bethany the capital gain on the distribution is calculated as follows The FMV of the property di... View the full answer