What is the us tax consequence to abc corp

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Reference no: EM133433522

Question: XYZ Corp., a Delaware corporation, earned $100,000 in profits in 2023. To reward shareholders, the board of directors declared and paid a $1 distribution per share to each of its shareholders ($100,000 in total).

Part a. Joe K. is an individual who owns 10% of the shares of XYZ Corp. and receives a distribution of $10,000. What is the U.S. tax consequence to Joe K. on the distribution from XYZ Corp.? Explain.

Part b. ABC Corp., a New York corporation, owns 10% of the shares of XYZ Corp. and receives a distribution of $10,000. What is the U.S. tax consequence to ABC Corp. on the distribution from XYZ Corp.? Explain.

Reference no: EM133433522

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