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

question 20

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,year 1.Betsy's 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:

Semiannual Payments

Payments that are made twice a year, commonly found in the context of bonds or loan agreements.