On January 1 of the current year, Rhondell Corporation has accumulated E & P of $36,000. Current E & P for the year is $108,000, earned evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of Rhondell from January 1 to April 30. On May 1, Elizabeth sells all of her stock to Marshall. Rhondell makes two distributions to shareholders during the year: a total of $57,600 ($28,800 to Elizabeth and $28,800 to Jonathan) on April 30 and a total of $100,800 ($50,400 to Jonathan and $50,400 Marshall) on December 31. Determine the allocation of the distributions by completing the table below. Assume that the shareholders have sufficient basis in their stock for any amount that is treated as return of capital.
On January 1 of the current year, Rhondell Corporation has accumulated E & P of $36,000. Current E & P for the year is $108,000, earned evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of Rhondell from January 1 to April 30. On May 1, Elizabeth sells all of her stock to Marshall. Rhondell makes two distributions to shareholders during the year: a total of $57,600 ($28,800 to Elizabeth and $28,800 to Jonathan) on April 30 and a total of $100,800 ($50,400 to Jonathan and $50,400 Marshall) on December 31. Determine the allocation of the distributions by completing the table below. Assume that the shareholders have sufficient basis in their stock for any amount that is treated as return of capital.
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 22CE
Related questions
Question
1
Transcribed Image Text:On January 1 of the current year, Rhondell Corporation has accumulated E & P of $36,000. Current E & P for the
year is $108,000, earned evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of
Rhondell from January 1 to April 30. On May 1, Elizabeth sells all of her stock to Marshall. Rhondell makes two
distributions to shareholders during the year: a total of $57,600 ($28,800 to Elizabeth and $28,800 to Jonathan) on
April 30 and a total of $100,800 ($50,400 to Jonathan and $50,400 Marshall) on December 31.
Determine the allocation of the distributions by completing the table below. Assume that the shareholders have
sufficient basis in their stock for any amount that is treated as return of capital.
If an amount is zero, enter "0". Round final answers to the nearest dollar.
April 30 distribution of $57,600
December 31 distribution of $100,800
From Current
E & P
From Accumulated
E & P
36,000 X
$
21,600 X $
0
14,400 X
Treated as
Return of Capital
0
86,400 X
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 6 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT