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s2008m [1.1K]
3 years ago
6

Longhorn Company reports current E&P of $100,000 in 20X3 and a deficit of ($200,000) in accumulated E&P at the beginning

of the year. Longhorn distributed $300,000 to its sole shareholder on January 1, 20X3. The shareholder's tax basis in his stock in Longhorn is $100,000. How is the distribution treated by the shareholder in 20X3?
Business
1 answer:
ikadub [295]3 years ago
4 0

Answer: Dividend of $100,000, Capital Gain of $100,000 and Tax Free Return on basis of $100,000

Explanation:

Longhorn Company reports current E&P of $100,000 in 20X3 and still distributed $300,000 to it's sole shareholder. Because it had $100,000 in current E&P, that is all it can declare as Dividends. For this reason, the shareholder will recognize $100,000 as Dividends.

The Shareholder has a basis of $100,000 in the stock of Longhorn. As a result of this, $100,000 of the Distribution will be termed a TAX FREE Return on Basis because he is receiving a return on his basis that is neither a dividend nor capital gain.

The remaining $100,000 will be considered a Capital Gain as it reflects a rise in his stock.

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IrinaVladis [17]

Your share of the sales proceeds from the sale of a home you had inherited should be reported on Schedule D in the Investment Income section of TaxAct. You would enter "Inherited" as the date the property was acquired, then enter the cost basis, date of sale, and the sales proceeds.

3 0
2 years ago
The straight-line depreciation method and the double-declining-balance depreciation method: A. Produce the same depreciation exp
Artemon [7]

The relationship between the straight-line and double-declining-balance method is that they D. Produce the same total depreciation over an asset's useful life.

<h3>How are the straight-line and double-declining-balance methods related?</h3>

While they do not produce the same depreciation every year, they will eventually depreciate an asset in the same way overtime.

What this means is that both methods will depreciate an asset by the same amount at the end of the asset's life. However, the depreciation amounts will vary by method on an annual basis.

In conclusion, option D is correct.

Find out more on depreciation methods at brainly.com/question/26948130.

6 0
2 years ago
Unexpected weather can even have an effect on the business cycle. true or false
gulaghasi [49]
True.................
7 0
3 years ago
Read 2 more answers
The market rate is the rate used to calculate the actual cash payments made to bondholders.
NISA [10]
It is false that the market rate is used to calculate the actual cash payments made to bondholders rather it is the economic price for goods and services that is offered for them in free market or market place. It is also called a going rate, the market value or market price are equal only under conditions of market equilibrium and rational expectation.
6 0
3 years ago
You receive​ $100 today,​ $200 in one​ year, and​ $300 in two years. If you deposit these cash flows into an account earning 12​
Lisa [10]

Answer:

$628.49

Explanation:

Cash flows                     Discount factor      Future value

$100                         1.1449                $114.49

$200                         1.07                   $214

$300                          1                        $300

Future value                                                  $628.49

The discount factor is as follows

= (1 + interest rate)^number of years

For $100 the year is 2

For $200 the year is 1

For $300 the year is 0

3 0
3 years ago
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