What is the tax treatment of the distribution to barney

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Reference no: EM131618746

A) Elk Company reports current E&P of $100,000 and negative accumulated E&P of $300,000. Elk distributed $200,000 to its sole shareholder, Barney Rubble, on December 31, 20X3. Barney's tax basis in his Elk stock is $75,000. What is the tax treatment of the distribution to Barney and what is his tax basis in Elk stock after the distribution?

B) Superior Corporation reported taxable income of $%1,000,000 in 20X3. Superior paid a dividend of $100,000 to its sole shareholder, Mary Yooper. Superior Corporation is subject to a flat rate tax of 34%. The dividend meets the requirements to be a "qualified dividend" and Mary is subject to a tax rate of 15% on the dividend, what is the total federal income tax imposed on the corporate income earned by Superior and distributed to Mary as a dividend?

Reference no: EM131618746

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