Smudge Corporation has two shareholder - Julia and Maddy. At January 1, 2022, Smudge had accumulated earnings and profits of 1,000,000 Smudge's 2022 earnings and profits were (200,000) During 2022 Smudge made the following distributions: Julia Maddy Total January 1, 2022 250,000 250,000 500,000 July 1, 2022 200,000 200,000 400,000 September 1, 2022 100,000 100,000 200,000 At January 1, 2022, Julia and Maddy both had basis in Smudge of 10,000 A What are the tax consequences to Maddy as a result of the September 1 distribution? B What are Smudge Corporation's accumulated earnings and profits as at January 1, 2023?

Answer rating: 100% (QA)

SOLUTION A Tax consequences to Maddy as a result of the September 1 distribution Since ... View the full answer