Mishra converted from a C corporation to an S corporation on January 1, when its accumulated
E&P was $161,000. This year, Mishra generated an $11,000 operating loss
and distributed $25,000 cash to its shareholders.
a. How much of the distribution was a dividend?
b. Compute Mishra's accumulated E&P and AAA on January 1 of the next year.
Once the company elects to be an S corporation, E&P = $161,000, AAA = $0.
The company ...
This solution explains how much of the distribution was a dividend and computes Mishra's accumulated E&P and AAA on January of the next year.