Emma is the sole shareholder in Pacific Corporation and has owned the stock for five years. The basis in her stock is $50,000. Pacific distributes $35,000 to Emma. Accumulated earnings and profits at the beginning of the year equal $25,000 and current earnings and profits equal $5,000. 

Required: 

a. What are the tax consequences of this information?

b. What are the tax consequences of this information if, instead of distributing $35,000 to Emma, Pacific distributes $100,000 to Emma?

Answer rating: 100% (QA)

ANSWER a Emma reports 30000 of taxable dividend income ... View the full answer