Blueacre Inc., an accrual basis corporation, has $50,000 accumulated E&P and has taxable income of $300,000...

  

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Blueacre Inc., an accrual basis corporation, has $50,000 accumulated E&P and has taxable income of $300,000 in the current year (2021). Included in its determination of taxable income are the following transactions: . Federal income tax expense Tax-exempt interest income ● ● · • Increase in cash surrender value of LI policy • Increase in LIFO recapture amount Current year sec. 179 expense deduction ● Capital loss carryover used in 2021 (all originating in 2020) Life insurance premium paid ● Sec. 179 expense deduction in 2020 • Excess of MACRS depreciation over ADS depreciation Charitable contribution carryover (all originating in 2021) • Installment sale - total principal received* . $63,000 $2,200 $25,000 $18,000 $2,500 $7,200 $25,000 $35,000 $10,000 $5,000 $50,000 *In 2019, Blueacre Inc. sold land under the installment method. At the time of the sale, the land had a basis of $90,000 and was sold for its FMV of $150,000. Blueacre Inc. was to receive three equal installments of $50,000 each (ignore any interest income considerations with respect to this sale). 1. What is Blueacre Inc.'s current E&P for 2021 (show each individual adjustment)? 2. Blueacre distributes $400,000 to shareholder A on November 1, 2021 and $600,000 to shareholder B on December 15, 2021. These are the only distributions during the year. Determine how much of each distribution is a dividend. Blueacre Inc., an accrual basis corporation, has $50,000 accumulated E&P and has taxable income of $300,000 in the current year (2021). Included in its determination of taxable income are the following transactions: . Federal income tax expense Tax-exempt interest income ● ● · • Increase in cash surrender value of LI policy • Increase in LIFO recapture amount Current year sec. 179 expense deduction ● Capital loss carryover used in 2021 (all originating in 2020) Life insurance premium paid ● Sec. 179 expense deduction in 2020 • Excess of MACRS depreciation over ADS depreciation Charitable contribution carryover (all originating in 2021) • Installment sale - total principal received* . $63,000 $2,200 $25,000 $18,000 $2,500 $7,200 $25,000 $35,000 $10,000 $5,000 $50,000 *In 2019, Blueacre Inc. sold land under the installment method. At the time of the sale, the land had a basis of $90,000 and was sold for its FMV of $150,000. Blueacre Inc. was to receive three equal installments of $50,000 each (ignore any interest income considerations with respect to this sale). 1. What is Blueacre Inc.'s current E&P for 2021 (show each individual adjustment)? 2. Blueacre distributes $400,000 to shareholder A on November 1, 2021 and $600,000 to shareholder B on December 15, 2021. These are the only distributions during the year. Determine how much of each distribution is a dividend.

Answer rating: 100% (QA)

From the given data Current Year taxable income is 150000 from the sale ... View the full answer