Tax Treatment of Distributions
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MikeCO made the following distributions during the year:
*5/1/x1 $60,000
*9/1/x1 40,000
Determined the tax treatment of each distribution under each of the following independent circumstances:
Accum E&P Curr E&P
a)$10,000 $50,000
b)(70,000) 50,000
c) 95,000 (18,250)
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Solution Summary
This solution provides calculations and and justifications on the tax treatment of each distribution circumstance.
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Circumstance A
*5/1/x1 $60,000 - tax as dividends
*9/1/x1 40,000 - return of capital, hence non taxable. However, if it has a capital gains component then it will be taxed depending on whether the capital gains are short or long ...
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