17.At the beginning of the year, Tote, Inc., had $75,000 in its AAA and $90,000 of earnings and profits from prior C corporation years. During the year, Tote, Inc., earned $75,000 of ordinary income and paid $174,000 in distributions to its shareholders. Assume that Jeromy owns 30 percent of Tote, Inc., his basis in Tote, Inc., at the beginning of the year is $10,000. How much, if any, of the distribution is taxable as a dividend to Jeromy? Explain the rule and show computation
17.At the beginning of the year, Tote, Inc., had $75,000 in its AAA and $90,000 of earnings and profits from prior C corporation years. During the year, Tote, Inc., earned $75,000 of ordinary income and paid $174,000 in distributions to its shareholders. Assume that Jeromy owns 30 percent of Tote, Inc., his basis in Tote, Inc., at the beginning of the year is $10,000. How much, if any, of the distribution is taxable as a dividend to Jeromy? Explain the rule and show computation
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 1BCRQ
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17.At the beginning of the year, Tote, Inc., had $75,000 in its AAA and $90,000 of earnings and profits from prior C corporation years. During the year, Tote, Inc., earned $75,000 of ordinary income and paid $174,000 in distributions to its shareholders. Assume that Jeromy owns 30 percent of Tote, Inc., his basis in Tote, Inc., at the beginning of the year is $10,000. How much, if any, of the distribution is taxable as a dividend to Jeromy? Explain the rule and show computation.
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