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Determine the tax status of each distribution made this year

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Reference no: EM132565507

Question - Thriller Corporation has one- class of voting common stock, of which 1,000 shares are issued and outstanding. The shares are owned as follows:

Joe Jackson 400

Mike Jackson (Joe's son) 200

Jane Jackson (Joe's daughter) 200

Vinnie Price (unrelated) 200

Total 1,000

Thriller Corporation has current E&P of $400,000 for this year and accumulated E&P at January 1 of this year of $60,000.

During this year, the corporation made the following distributions to its shareholders:

03/31: Distributed $100/share to each shareholder ($100,000 in total).

06/30: Distributed $100/share to each shareholder ($100,000 in total).

09/30: Distributed $100/share to each shareholder ($100,000 in total).

12/31: Redeemed all of Vinnie's shares for $250,000 in cash.

Required -

a. Determine the tax status of each distribution made this year.

b. Compute the corporation's accumulated E&P at January 1 of next year.

Reference no: EM132565507

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