Book Exercise 4-1 (Algorithmic) (LO. 3) Champ received a $50,400 distribution from NeatCo, a U.S. C corporation. NeatCo's earnings and profits for the year totaled $30,240 How much dividend income does Champ recognize? CO Exercise 4-5 (Algorithmic) (LO. 9) Leilei operates a sole proprietorship, using the accrual basis of tax accounting. Last year, she claimed a $32,125 bad debt deduction for a receivable from Jackie. But this year, Jackie sent her a check for $22,488, which Leilei accepted in full satisfaction of the receivable. How much gross income does Leilei record for the item this year? 21,368 X Feedback Check My Work An important tax concept is the tax benefit rule. In certain situations, taxpayers must determine the extent to which receipts can be excluded under the tax benefit rule. Exercise 4-3 (LO. 8) Before any debt cancellation, the insolvent KuhnCo holds business equipment, its only asset, with a fair market value of $1,000,000 and related liabilities of $1,250,000. The lender agrees to cancel $400,000 of the liabilities. KuhnCo has no other liabilities. If an amount is zero, enter "0". a. How much gross income does KuhnCo report as a result of the debt cancellation? 50,000 X Feedback Check My Wor Gross income usually is generated when a creditor cancels a borrower's debt or accepts a payment for less than the amount owed. However, there is a limited exclusion for cancellation of indebtedness income when the debtor is insolvent. b. How would your answer change, if at all, had the lender canceled $200,000 of the debt? 50,000 x Feedback Check My Work Incorrect