CSU, Inc., is a calendar year S corporation. CSU's Form 1120S shows nonseparately stated ordinary income...

 

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CSU, Inc., is a calendar year S corporation. CSU's Form 1120S shows nonseparately stated ordinary income of $120,000 for the year. Taewon owns 30% of the CSU stock throughout the year. The following information is obtained from the corporate records. Tax-exempt interest income Salary paid to Taewon Charitable contributions Dividends received from a non-U.S. corporation Short-term capital loss Depreciation recapture income Refund of prior state income taxes Cost of goods sold Long-term capital loss Administrative expenses Long-term capital gain Selling expenses Taewon's beginning stock basis Taewon's additional stock purchases Beginning AAA Taewon's loan to corporation $ 4,500 (78,000) (9,000) 7,500 (9,000) 16,500 7,500 ($108,000) (10,500) (27,000) 21,000 (16,500) 48,000 13,500 46,500 30,000 Assume all facts remain the same and CSU had previously been a C corporation and had 60,000 of E&P. Show the effect, if any, of the distribution on Taewon's stock basis, ending AAA, ending E&P. Show also the taxability, if any, of the distribution to Taewon. CSU, Inc., is a calendar year S corporation. CSU's Form 1120S shows nonseparately stated ordinary income of $120,000 for the year. Taewon owns 30% of the CSU stock throughout the year. The following information is obtained from the corporate records. Tax-exempt interest income Salary paid to Taewon Charitable contributions Dividends received from a non-U.S. corporation Short-term capital loss Depreciation recapture income Refund of prior state income taxes Cost of goods sold Long-term capital loss Administrative expenses Long-term capital gain Selling expenses Taewon's beginning stock basis Taewon's additional stock purchases Beginning AAA Taewon's loan to corporation $ 4,500 (78,000) (9,000) 7,500 (9,000) 16,500 7,500 ($108,000) (10,500) (27,000) 21,000 (16,500) 48,000 13,500 46,500 30,000 Assume all facts remain the same and CSU had previously been a C corporation and had 60,000 of E&P. Show the effect, if any, of the distribution on Taewon's stock basis, ending AAA, ending E&P. Show also the taxability, if any, of the distribution to Taewon.

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To analyze the effect of the distribution on Taewons basis ending Accumulated Adjustments Account AAA and ending Earnings and Profits EP as well as th... View the full answer