Houghton Corporation Reports Negative Current E&P of $500,000 and Negative

question 2

Essay

Houghton Corporation reports negative current E&P of $500,000 and negative accumulated E&P of $800,000.Houghton distributed $100,000 to its sole shareholder, Blossom Applegate, on December 31, year 1.Blossom's tax basis in her Houghton stock is $50,000.What is the tax treatment of the distribution to Blossom and what is her tax basis in Houghton stock after the distribution?

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