Answer Happy

7. A corporation has a deficit in current E&P of ($6,000)
for the year, and has $11,000 of
accumulated E&P as of the first of the year. It distributes
$12,000 on August 1. How
much of the distribution is a dividend?
8. A corporation with taxable income of $150,000 paid $20,000 in
federal income taxes
and had $12,000 of tax-exempt interest. It also. donated $20,000
to charity but could only
deduct $16,000 and carried the remaining $4,000 forward. What's
its E&P for the year?
9. Tom owns 200 shares of X Corp and Alice owns 300 shares. The
corp has $100,000
of E&P. The corp declares a stock dividend that gives each
of them a choice: Tom can
take cither 20 shares or $2,000, and Alice can take either 30
shares or $3,000. Tom takes
the money and is taxed on $2,000 of dividend income. Alice takes
the stock. (a) How
much dividend income does Alice have to report? (b) What is her
basis in the 30 new shares?