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Maria Owns 75% and Christopher Owns 25% of Cockatoo Corporation

question 89

Essay

Maria owns 75% and Christopher owns 25% of Cockatoo Corporation, a calendar year taxpayer. Cockatoo makes a
$600,000 distribution to Maria on April 1 and a $200,000 distribution to Christopher on May 1. Cockatoo's current
E & P is $120,000 and its accumulated E & P is $500,000. What are the tax implications of the distributions to Maria and Christopher?


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