Larry, the sole shareholder of Brown Corporation, sold his stock to Ed on July 30 for $270,000. Larry's basis in the stock was $200,000 at the beginning of the year. Brown had accumulated E & P of $120,000 on January 1 and has current E & P of $240,000. During the year, Brown made the following distributions: $450,000 cash to Larry on July 1 and $150,000 cash to Ed on December 30. a. How much of the current E & P is allocated to Larry’s distribution?
$

b. How much of the current E & P is allocated to Ed’s distribution?
$

c. How much of the $450,000 distribution is taxed as dividend income to Larry?
$

d. How much of the $150,000 distribution is taxed as dividend income to Ed?
$

e. Larry recognizes a capital gain of $ on the sale of the stock.

A

Explanation:

Larry, the sole shareholder of Brown Corporation, sold his stock to Ed on July 30 for $270,000. Larry's basis in the stock was $200,000 at the beginning of the year. Brown had accumulated E & P of $120,000 on January 1 and has current E & P of $240,000. During the year, Brown made the following distributions: $450,000 cash to Larry on July 1 and $150,000 cash to Ed on December 30

a. How much of the current E & P is allocated to Larry’s distribution?

$

b. How much of the current E & P is allocated to Ed’s distribution?

$

c. How much of the $450,000 distribution is taxed as dividend income to Larry?

$

d. How much of the $150,000 distribution is taxed as dividend income to Ed?

$

e. Larry recognizes a capital gain of $ on the sale of the stock.

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