Gross income for the current taxable year

Reference no: EM13186295

EFG Inc. is a calendar year corporation. EFG had current earnings and profits of $100,000 and no accumulated earnings and profits when it distributed a total of $160,000 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.

1. How much does Jane include 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: EM13186295

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