How is she taxed on the distribution

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Reference no: EM131989366

Sparrow Corporation is a calendar year taxpayer. At the beginning of the current year, Sparrow has accumulated E & P of $83600.

The corporation incurs a deficit in current E & P of $117,040 that accrues ratably throughout the year. On June 30, Sparrow distributes $50,160 to its sole shareholder, Libby.

If Libby's stock has a basis of $8,360 how is she taxed on the distribution?

Taxable dividend income in the amount of $_______

Tax-free recovery of basis in the amount of $_________

Capital gains in the amount of $________

Reference no: EM131989366

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