Lone Star Company is a calendar-year corporation, and this year Lone Star reported $175,000 in current E&P that accrued evenly throughout the year. At the beginning of the year, Lone Star's accumulated E&P was $21,000. At the beginning of the year, Lone Star's sole shareholder was Matt. Lone Star declared $52,500 in cash distributions on each of the following dates: March 31, June 30, September 30, and December 31. Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. b. Suppose that Matt sold half of the shares to Chris on June 1st for $47,500. How much dividend income will Matt recognize this year? C. If Matt's basis in the Lone Star shares was $7,300 at the beginning of the year, how much capital gain will he recognize on the sale and distributions from Lone Star?
Lone Star Company is a calendar-year corporation, and this year Lone Star reported $175,000 in current E&P that accrued evenly throughout the year. At the beginning of the year, Lone Star's accumulated E&P was $21,000. At the beginning of the year, Lone Star's sole shareholder was Matt. Lone Star declared $52,500 in cash distributions on each of the following dates: March 31, June 30, September 30, and December 31. Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign. b. Suppose that Matt sold half of the shares to Chris on June 1st for $47,500. How much dividend income will Matt recognize this year? C. If Matt's basis in the Lone Star shares was $7,300 at the beginning of the year, how much capital gain will he recognize on the sale and distributions from Lone Star?
Chapter22: S Corporations
Section: Chapter Questions
Problem 36P
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A. 1
Transcribed Image Text:Lone Star Company is a calendar-year corporation, and this year Lone Star reported $175,000 in current E&P that accrued
evenly throughout the year. At the beginning of the year, Lone Star's accumulated E&P was $21,000. At the beginning of
the year, Lone Star's sole shareholder was Matt. Lone Star declared $52,500 in cash distributions on each of the following
dates: March 31, June 30, September 30, and December 31.
Note: Leave no answer blank. Enter zero if applicable. Negative amount should be indicated by a minus sign.
b. Suppose that Matt sold half of the shares to Chris on June 1st for $47,500. How much dividend income will Matt
recognize this year?
C. If Matt's basis in the Lone Star shares was $7,300 at the beginning of the year, how much capital gain will he recognize
on the sale and distributions from Lone Star?
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