Discuss how much is includible by jane in her gross income

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Fact Pattern for Questions 21 and 22. EFG, Inc. is a calendar year corporation. EFG, Inc. had current earnings and profits of $100,000 and no accumulated earnings and profits when it distributed a total of $160,000, as a nonliquidating distribution, to its two equal shareholders, Jane and Joe. On the date of the cash distribution, Jane's basis in her EFG, Inc. stock was $10,000 and Joe's basis in his EFG, Inc. stock was $35,000. How much is includible by Jane in her gross income for the current taxable year with respect to the distribution to her?

A. $50,000 dividend income and 0 capital gain.
B. $80,000 dividend income and 0 capital gain.
C. 0 dividend income and $70,000 capital gain.
D. $50,000 dividend income and $20,000 capital gain.

 

Reference no: EM131751631

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