Answer:
Explanation:
Pam and Jon's dividend income of $134,500 each [($185,000 Accumulated E&P + $111,000 current E&P) / 2],
Statement of distribution for shareholders for tax purpose :-
Pam Jon
Total distribution $185,000 $185,000
less: Dividend income $134,500 $134,500
<em> $50,500 $50,500</em>
less : Stock basis $25,900 $103,600
Capital gain $24,600 $0
Pam has a taxable gain of $24,600 which reduces the stock basis to $0, whereas Jon has not any taxable gain but the stock basis has reduced to $53,100 [$103,600- $50,500]
