Problem

Kings Corporation is a calendar year taxpayer. Lou Anne owns all of its stock. Her basis for the stock is $5,000. On April 1 of the current? (non-leap) year Kings distributes $55,000 to Lou Anne.

Requirement

Determine the tax consequences of the cash distribution in each of the following independent? situations:

a. Current? E&P $10,000?; accumulated? E&P $25,000.

b. Current? E&P of $38,000?; accumulated? E&P of $(30,000).

c. Current? E&P of $(80,000)?; accumulated? E&P of $ 50,000.

d. Current? E&P of $ (15,000)?; accumulated? E&P of $ (15,000)