Chapter c 4 corporate nonliquidating distributions

14 Feb

D) Buddy must have purchased the redeemed stock from a person whose stock ownership would be attributed to Buddy.

54) All of Sphere Corporation's single class of stock is owned by four unrelated individuals in the following manner: Zack 27%, Xu 24.33%, Yvonne 24.33%, and Win 24.33%.

Sarah's basis in her stock is ,000 and Matt's basis in his stock is ,000. Its current E&P and distributions for each year through 2010 are as follows: 2007 $(20,000) -0- 2008 30,000 -0- 2009 36,000 ,000 2010 16,000 -0- Is the distribution made from current or accumulated E&P? 75) In 2010, Tru Corporation deducted ,000 of bad debts. b) What effect does the ,000 have on E&P in 2011, if any?

How are the distributions characterized to Sarah and Matt? It received no tax benefit from the deduction because it had an NOL in 2010 that it was unable to carry back or forward. 76) In the current year, Ho Corporation sells land that has a ,000 basis and a ,000 FMV to Henry, an unrelated individual.

How the corporation and its shareholders treat distributions for tax purposes depends on not only what the corporation distributes but also the circumstances surrounding the distribution. Was the distribution made in exchange for some of the shareholder s stock?

This chapter addresses distributions made when a corporation is not in the process of liquidating.

The distributing corporation may or may not be required to recognize gain or loss when making the distribution.B) Buddy cannot be an officer of the corporation after the redemption.C) Buddy cannot acquire an interest, even by inheritance, for 10 years unless the bequest was made prior to the redemption.Henry makes a ,000 down payment this year and will pay Ho ,000 per year for the next three years, plus interest on the unpaid balance at a rate acceptable to the IRS. Since Ho is not in the business of selling land, it will use the installment method of accounting.How does this transaction affect Ho's E&P in the current year and the three subsequent years?