A calendar-year corporation has a $15,000 current E&P deficit and a $40,000 positive accumulated E&P balance. The shareholders of the corporation have a total basis in outstanding shares of $30,000. A $75,000 distribution is made to the shareholders on the last day of the year. The tax results to the shareholders will be
A) dividend income of $25,000, a tax-free return of capital of $30,000, and capital gain of $20,000.
B) dividend income of $0, a tax-free return of capital of $30,000, and capital gain of $45,000.
C) dividend income of $25,000, a tax-free return of capital of $5,000, and capital gain of $45,000.
D) dividend income of $40,000, a tax-free return of capital of $30,000, and capital gain of $5,000.
A) dividend income of $25,000, a tax-free return of capital of $30,000, and capital gain of $20,000.
If there is a current E&P deficit and a positive balance in accumulated E&P, both the current and accumulated E&P are netted on the date of the distribution. Thus, $25,000 ($40,000 - $15,000) is dividend income; $30,000 (the basis in the stock) is tax-free return of capital; the remainder or $20,000 is long-term capital gain.
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How does strategic planning benefit companies?
What will be an ideal response?
How does habitual decision making differ from extended problem solving?
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A migration path:
a. is an element of the bowling alley strategy b. starts with the beachhead c. helps the customer transition between product generations d. should be based on incremental improvements e. all of the above