Yellow Corp., an S corporation, previously operated as a C corporation. At the time the S election
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Yellow Corp., an S corporation, previously operated as a C corporation. At the time the S election was made (beginning of 2019), Yellow Corp. had accumulated earnings & profits of $20,000.
At the beginning of 2020, Yellow Corp. still had accumulated E&P of $20,000 and had an AAA balance of $100,000. During 2020, Yellow Corp. reported the following:
- Ordinary business income: $210,000
- Separately stated income items: $10,000 (not tax-exempt income)
- Separately stated income items: $5,000 (municipal bond interest – tax-exempt)
- Separately stated loss items: $20,000
At the beginning of 2020, Sunny, the sole shareholder of Yellow Corp., had a stock basis of $150,000. During 2020, Yellow Corp. distributed $400,000 to Sunny.
a) What amount of the distribution is treated as dividend?
b) What amount of the distribution is treated as capital gain?
Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
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