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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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3 years ago
In the exact moment you run out of laundry detergent and realize you need to pick some up at the store, you are in the ________
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3 years ago
Upon graduating from college, you make an annual salary of $58,381. You set a goal to double it in the future. If your salary in
Fynjy0 [20]

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Explanation:

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With The Rule of 70, you are able to calculate the amount of time it will take an investment to double if you divide 70 by the growth rate of the investment.

In this scenario, the investment is your salary and the growth rate is 7.61% pee year.

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7 0
3 years ago
Damien McCoy has loaned money to his brother at an interest rate of 5.85 percent. He expects to receive $987, $1,012, $1,062, an
yKpoI14uk [10]

Answer:

The answer is: $3,657

Explanation:

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3 0
3 years ago
at the end of 2018, river plate builders had two jobs still in process with a total balance of $132,200. what overhead rate is r
Ksju [112]

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8 0
3 years ago
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