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:

Transferring

The act of moving or conveying something from one place, person, or entity to another.

Consistent Sentence Structure

The practice of using a uniform pattern of word order and sentence construction throughout a text to improve readability and coherence.

Verbs-not Nouns

A stylistic approach emphasizing action-oriented language to make writing more dynamic and engaging.

Passive Voice

A grammatical construction in which the subject of the sentence is acted upon by the verb, often resulting in a less direct or weaker statement.