Emma is the sole shareholder in Pacific Corporation and has owned the stock for five years. The basis in her stoc
$50,000. Pacific distributes $35,000 to Emma. Accumulated earnings and profits at the beginning of the year equa and current earnings and profits equal $5,000.
Required:
a. What are the tax consequences of this information?
b. What are the tax consequences of this information if, instead of distributing $35,000 to Emma, Pacific distributes $100,000 to Emma?

Question

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The Answer of Emma is the sole shareholder in Pacific Corporation and has owned the stock for five years. The basis in her stoc
$50,000. Pacific distributes $35,000 to Emma. Accumulated earnings and profits at the beginning of the year equa and current earnings and profits equal $5,000.
Required:
a. What are the tax consequences of this information?
b. What are the tax consequences of this information if, instead of distributing $35,000 to Emma, Pacific distributes $100,000 to Emma?

Emma Is the Sole Shareholder in Pacific Corporation and Has