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How much dividend income will Matt recognize this year

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Question - Lone Star Company is a calendar-year corporation, and this year Lone Star reported $120,000 in current E&P that accrued evenly throughout the year. At the beginning of the year, Lone Star's accumulated E&P was $15,600. At the beginning of the year, Lone Star's sole shareholder was Matt McCon. Lone Star declared $34,800 in cash distributions on each of the following dates: March 31, June 30, September 30, and December 31.

a) How much of the $139,200 in total distributions will be treated as dividends?

b) Suppose that Matt sold half of his shares to Chris Coop on June 1st for $50,000. How much dividend income will Matt recognize this year?

c) If Matt's basis in his Lone Star shares was $8,000 at the beginning of the year, how much capital gain will he recognize on the sale and distributions from Lone Star?

Reference no: EM133073440

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