A calendar-year corporation has a $75,000 current E&P amount, and a $25,000 positive accumulated E&P balance at the beginning of the year. Shareholders of the corporation have a total basis in outstanding shares of $40,000. The corporation pays a $120,000 distribution to the shareholders. The tax results to the shareholders will be
A) dividend income of $100,000 and capital gain of $20,000.
B) dividend income of $60,000 and capital gain of $60,000.
C) dividend income of $100,000 and no other consequences.
D) dividend income of $100,000 and a tax-free return of capital of $20,000.
D) dividend income of $100,000 and a tax-free return of capital of $20,000.
A distribution is deemed to be made first out of current E&P and then out of accumulated E&P. Excess distributions result in a tax-free return of capital to the extent of the shareholders' bases.
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Sean purchased a new car. One of the car's wheels came undone, and Sean crashed into a tree. Sean was not wearing his seatbelt when the car crashed. Sean filed a lawsuit against the car manufacturer
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Discount Sales Company uses a standard cost system
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Mutual Property Insurance Company has a surplus of $2 million. According to a conservative rule, how much in new net premiums can Mutual Property Insurance Company safely write?
A) $2 million B) $8 million C) $10 million D) $20 million
Esteban and Florian want to form a limited liability company (LLC) to manage their business, Gordian Nuts. LLC statutes have been adopted in
A. all states. B. no states. C. less than one-fifth of the states. D. only Wyoming and Florida.