White Corporation Is a Calendar-Year Taxpayer

question 25

Essay

White Corporation is a calendar-year taxpayer. Wilhelmina owns all of its stock. Her basis for the stock is $25,000. On March 1 of the current year (not a leap year), White Corporation distributes $60,000 to Wilhelmina. Determine the tax consequences of the cash distribution to Wilhelmina in each of the following independent situations:
a)Current E&P $15,000, accumulated E&P $50,000.
b)Current E&P $25,000, accumulated E&P $(25,000).
c)Current E&P ($36,500), accumulated E&P $65,000.
d)Current E&P ($10,000), accumulated E&P $(25,000).

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Definitions:

Income

Income generated regularly from employment or investments.

Soda

A carbonated soft drink that is flavored and sweetened, often consumed as a beverage.

Levy

Imposition of a tax, fee, or fine by a government or regulatory authority.

Consumption

The act of using goods and services to satisfy needs or wants.