Jack and Jill form a C corporation called “Up The Hill” (UTH) specializing in manufacturing and selling anti-rolling equipment. 5 years after its formation, Up the Hill Corporation wants to pay dividends to its shareholders Jack and Jill. On 1/1 Year 6, it has accumulated an E&P of $100,000 and a current E&P of $50,000. It distributes a $20,000 cash dividend at the end of the year to Jack and Jill for a total of $40,000. 

How much of the dividend distribution is taxable to Jack and Jill? 

What is the effect on UTH’s current E&P?

Answer rating: 100% (QA)

Answer a The UTH corporation has to pay the dividend d... View the full answer