Austin Company Reports Positive Current E&P of $200,000 and Negative

question 97

Essay

Austin Company reports positive current E&P of $200,000 and negative accumulated E&P of $300,000. Austin distributed $250,000 to its sole shareholder, Betsy Bevo, on December 31, 20X3. Betsy' tax basis in her stock is $125,000. How much of the $250,000 distribution is treated as a dividend to Betsy and what is her tax basis in Austin stock after the distribution?

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Definitions:

Military Production Policies

Government-directed strategies and regulations for the production of military equipment, supplies, and arms to support defense efforts.

Nazi Germany

Refers to Germany under the rule of Adolf Hitler and the National Socialist German Workers' Party (NSDAP) from 1933 to 1945, known for its totalitarian government and the perpetration of the Holocaust.

Imperial Japan

The historical period from the Meiji Restoration in 1868 to the end of World War II in 1945, during which Japan was an empire that expanded aggressively in Asia.

American Savings Rate

The percentage of disposable income that households in the United States save rather than spend on consumption.