X Corporation has two shareholders, Adam and Bonnie. Adam owns 50% of the stock of X and

Fantastic news! We've Found the answer you've been seeking!

Question:

X Corporation has two shareholders, Adam and Bonnie. Adam owns 50% of the stock of X and has a basis of $40 in his shares. Bonnie owns the other 50% of the stock and has a basis of $100 in her shares. X has current year E&P of $94, before consideration of the following event. X has no accumulated E&P. Use a corporate tax rate of 21%. X distributes a group of AT&T shares to the two shareholders. It has owned the AT&T stock for several years. The FMV of the stock is $200 and the basis is $100.

To receive full credit, the following must be calculated and clearly stated: Calculate X's E&P after the distribution; Calculate the amount of the dividend, return of basis, and capital gain to each of Adam and Bonnie. Indicate the basis in the AT&T shares received by the shareholders