Answer:
<em>Sam's dividend income is $225,000 and has a reduction of stock basis of $27,500</em>
<em>Explanation:</em>
<em>From the example ,</em>
<em>Given that,</em>
<em>Sam stock is =$52.500</em>
<em>Blue corporation has deficit in accumulated E and P which is =$300,000</em>
<em>Blue corporation has current E and P of = $225,000</em>
<em>Blue distributes $250,000 to its shareholder on July 1st</em>
<em>Therefore,</em>
<em>Blue corporation has a current E & P of $225,000, to an extent, Sam has a taxable dividend. The remaining $25,000 reduces his basis stock.</em>
<em>Sam has an income dividend of $225,000 and reduces his stock basis to $27,500.</em>
