Thriller Corporation has one class of voting common stock, ofwhich 1,000 shares are issued and outstanding. The shares are ownedas follows: Joe Jackson 400 Mike Jackson (Joe’s son) 200 JaneJackson (Joe’s daughter) 200 Vinnie Price (unrelated) 200 Total1,000 Thriller Corporation has current E&P of $300,000 for thisyear and accumulated E&P at January 1 of this year of $500,000.During this year, the corporation made the following distributionsto its shareholders: 03/31: Paid a dividend of $10 per share toeach shareholder ($10,000 in total). 06/30: Redeemed 200 shares ofJoe’s stock for $200,000. Joe’s basis in the 200 shares redeemedwas $100,000. 09/30: Redeemed 60 shares of Vinnie’s stock for$60,000. His basis in the 60 shares was $36,000. 12/31: Paid adividend of $10/share to each shareholder ($7,400 in total).
a. Determine the tax status of each distribution made this year.(Hint: First, consider if the redemptions are treated as dividenddistributions or exchanges.)
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| | Treatment | | | dividend | distribution on 03/31 | | Joe | dividend | distribution on 06/30 | | Vinnie | exchange | distribution on 09/30 | | dividend | distribution on 12/31 |
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b. Compute the corporation’s accumulatedE&P at January 1 of next year. (Do not roundintermediate calculations.)
I need just the answer to part B! Thanks!!
