1099-DIV forms for Blanton Corporation
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Blanton Corporation had a deficit in its current earnings and profits of $36,500 for the current year. It has $75,000 in accumulated earnings and profits. The corporation made two distributions to its shareholders. On April 30, it distributed $40,000, and on November 30, it distributed $20,000.
When the corporation sends out its 1099-DIV forms to its shareholders, how much of the distribution will be taxable to the shareholders as dividends?
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The cited solution explains the concepts and includes detailed calculations to arrive at the answers. The calculations for the amount of dividends and return of capital are clearly noted.
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The current deficit is assumed to have been lost ratably over the year: $36500 / 365 = $100/day.
Assuming a calendar year corporation, the first distribution would be calculated as follows:
$40,000 dividend on April 30: $100/day x 120 days ...
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