Jerry Is the Sole Shareholder of Bluejay Corporation,a Calendar Year

question 111

Multiple Choice

Jerry is the sole shareholder of Bluejay Corporation,a calendar year C corporation.As of January 1,2012,Bluejay has a deficit of $50,000 in accumulated E & P.During 2012,it has current E & P of $300,000 and distributes a cash dividend of $400,000 to its shareholder.As of January 1,2012,Jerry's basis in the Bluejay stock is $75,000.One result of these transactions is:

• A) Dividend income to Jerry of $250,000.
• B) Dividend income to Jerry of $300,000.
• C) Dividend income to Jerry of $400,000.
• D) As of January 1, 2013, Bluejay Corporation has a deficit in accumulated earnings and profits of $150,000.
• E) None of the above.

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