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Account For Corporate Distributions Practice Test
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Q1
Summit Corp. (a C corporation) makes a nonliquidating distribution of $50,000 cash to its shareholder. Summit has current E&P of $15,000 and accumulated E&P of $10,000 at the beginning of the year. The shareholder’s basis in Summit stock is $30,000. Under IRC §301, what amount is treated as a dividend?
Summit Corp. (a C corporation) makes a nonliquidating distribution of $50,000 cash to its shareholder. Summit has current E&P of $15,000 and accumulated E&P of $10,000 at the beginning of the year. The shareholder’s basis in Summit stock is $30,000. Under IRC §301, what amount is treated as a dividend?