Cupo Corporation reported taxable income of $600,000 and paid federal income tax of $126,000 in 2020. At the beginning of the year the corporation had positive accumulated E&P of $25,000. The corporation had the following items in connection with its 2020 activities:

• Net capital loss of $15,000 included in determining its taxable income.
• $35,000 dividends received deduction.
• MACRS depreciation totaled 117,500 while E&P depreciation totaled $85,000
• $50,000 excess charitable contribution above the 10% limit.
• $5,000 of tax-exempt interest income.
• $75,000 of nondeductible political contributions.

Spect Corporation made a cash distribution of $750,000 to its sole shareholder on December 31, 2020.

Based on the above information, determine the following:

c. Assume the sole shareholder's tax basis in her stock equaled $50,000 prior to receiving the distribution. What is the shareholder’s basis in the stock after accounting for the distribution

d. What is Spect Corporation’s accumulated earnings and profits at the beginning of 2020?

Answer rating: 100% (QA)

c The shareholders basis in the stock after receiving the distribution is 725000 ... View the full answer