For this assignment, read the scenario below and then evaluate the impact of E&P.
ABC Corporation has current E&P of ($200,000). E&P at the
beginning of the year was ($100,000). ABC Corp. makes a distribution of
$350,000 to its sole shareholder on the least day of the year. The
shareholder had a tax basis of $50,000. Determine the following (make
sure that you show all calculations):
- How much of the distribution is treated like a dividend to the shareholder?
- After the distribution takes place, what is the shareholder’s tax basis in the ABC Corp. stock after the distribution?
- What is the balance in E&P for ABC Corp. the day after the distribution?
- Discuss why E&P is measured. If E&P was not measured in the scenario presented above, what are the potential problems?
Requirements:
Back up your discussion with research from two scholarly sources (you
may not use the course textbook to fulfill this requirement).
Your paper must be formatted according to APA
