Blue corporation has a deficit in accumulated E& P of 400,000 and has current E&P of $360,000. On july 1, Blue distributes $200,000 to its sole shareholder, Sam who has a basis in his stock of $60,000. What are the income tax conseqences to sam and blue corporation as a result of the distribution.

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Tax Consequences of the Distribution Sam Shareholder Ordinary Income Since Blue Corporation has a de... View the full answer