Determine the tax liability of Ann Inc

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Question - Rock Corporation distributed property with a fair market value of $100,000 and an adjusted basis of $70,000 to Ann, a shareholder of Rock Corporation. Prior to the distribution, Rock Corporation had a deficit in accumulated earnings and profits of $200,000 and current earnings and profits of $20,000. Ann has stock basis in Rock Corporations of $90,000.

How much of this distribution to Ann is dividend, return or capital, and capital gain. 

Assume that Ann is an individual in the 37% tax bracket. Determine Ann's tax liability for this distribution.

Assume instead that Ann is a C corporation (Ann, Inc.) and that Ann, Inc. has a 15% interest in Rock Corporation. Determine the tax liability of Ann, Inc. on this distribution of property.

Reference no: EM132955069

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