Longhorn Company reports current E&P of $145,000 in 20X3 and a deficit of ($290,000) in accumulated...

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Longhorn Company reports current E&P of $145,000 in 20X3 and a deficit of ($290,000) in accumulated E&P at the beginning of the year. Longhorn distributed $435,000 to its sole shareholder on January 1, 20X3. The shareholder's tax basis in his stock in Longhorm is $145,000. How is the distribution treated by the shareholder in 20X37 Multiple Choice $435,000 dividend $145,000 dividend, $145,000 tax free return of basis, and $145,000 capital gain $145,000 dividend and $290,000 tax-free retum of besis $0 dividend, $145,000 tax-free return of basis, and $290,000 capital gain Longhorn Company reports current E&P of $145,000 in 20X3 and a deficit of ($290,000) in accumulated E&P at the beginning of the year. Longhorn distributed $435,000 to its sole shareholder on January 1, 20X3. The shareholder's tax basis in his stock in Longhorm is $145,000. How is the distribution treated by the shareholder in 20X37 Multiple Choice $435,000 dividend $145,000 dividend, $145,000 tax free return of basis, and $145,000 capital gain $145,000 dividend and $290,000 tax-free retum of besis $0 dividend, $145,000 tax-free return of basis, and $290,000 capital gain

Answer rating: 100% (QA)

option 2 is correct EXPLANATION 435000 is distributed to shareholders hol... View the full answer