Wendy and David,equal Shareholders in Loon Corporation,receive $300,000 Each in Distributions

question 130

Multiple Choice

Wendy and David,equal shareholders in Loon Corporation,receive $300,000 each in distributions on December 31 of the current year.Loon's current year E & P is $500,000 and it has no accumulated E & P.Last year,Loon sold an appreciated asset for $600,000 (basis of $200,000) .Payment for one half of the sale of the asset was made this year.How much of Wendy's distribution will be taxed as a dividend?

• A)$0.
• B)$150,000.
• C)$250,000.
• D)$300,000.
• E)None of the above.

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Definitions:

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