Reference no: EM132460191
On January 1 of this year, ABC Corporation has accumulated E & P of $180,000. Current E & P for the year is $540,000, earned evenly throughout the year. Liz and John are sole equal shareholders of ABC Corp. from January 1 to April 30. On May 1, Liz sells all of her stock to Matthew. ABC Corp. makes two distributions to shareholders during the year: a total of $288,000 ($144,000 to Liz and $144,000 to John) on April 30 and a total of $504,000 ($252,000 to John and $252,000 Matthew) on December 31.
Problem Question 1: Determine the allocation of the distributions by completing the table below. Assume that the shareholders have sufficient basis in their stock for any amount that is treated as return of capital.
If an amount is zero, enter "0". If required, round any division to two decimal places and use in subsequent computations. Round final answers to the nearest dollar.
Current Accumulated Treated as
E & P E & P Return of Capital
4/30 distribution of $288,000 $__________ $__________ $__________
12/31 distribution of $504,000 $__________ $__________ $__________
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