McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

تمرين 11

Volunteer Corporation reported taxable income of $500,000 from operations for 2011.The company paid federal income taxes of $170,000 on this taxable income.During the year, the company made a distribution of land to its sole shareholder, Rocky Topp.The land's fair market value was $75,000 and its tax and E P basis to Volunteer was $25,000.Rocky assumed a mortgage attached to the land of $15,000.Any gain from the distribution will be taxed at 34 percent.The company had accumulated E P of $750,000 at the beginning of the year.a.Compute Volunteer's total taxable income and federal income tax paid as a result of the distribution.b.Compute Volunteer's current E P for 2011.c.Compute Volunteer's accumulated E P at the beginning of 2012.d.What amount of dividend income does Rocky report as a result of the distribution?
e.What is Rocky's income tax basis in the land received from Volunteer?