Queen owns 100% of Royal Corporation. Royal Corporation was initially formed as a C corporation but...
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Queen owns 100% of Royal Corporation. Royal Corporation was initially formed as a C corporation but has since elected to be treated as an S corporation. At the end of 2022, Royal Corporation's accumulated adjustments account (AAA) balance is $60,000 before considering any distributions, and its accumulated E&P from its years as a C corporation is $15,000. On December 31, Royal Corporation distributed $80,000 to Queen. Queen's stock basis before the distribution was $90,000. a) (4 points) What is the amount and character of income Queen must recognize on the distribution? b) (4 points) What is Queen's stock basis after accounting for the distribution? Queen owns 100% of Royal Corporation. Royal Corporation was initially formed as a C corporation but has since elected to be treated as an S corporation. At the end of 2022, Royal Corporation's accumulated adjustments account (AAA) balance is $60,000 before considering any distributions, and its accumulated E&P from its years as a C corporation is $15,000. On December 31, Royal Corporation distributed $80,000 to Queen. Queen's stock basis before the distribution was $90,000. a) (4 points) What is the amount and character of income Queen must recognize on the distribution? b) (4 points) What is Queen's stock basis after accounting for the distribution?
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a Queen must recognize ordinary income to the extent of Royal Corpor... View the full answer
Related Book For
South Western Federal Taxation 2017 Essentials Of Taxation Individuals And Business Entities
ISBN: 9780357109144
20th Edition
Authors: William A. Raabe, David M. Maloney, James C. Young, Annette Nellen
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