Elk Company reports a deficit in current E&P of ($270,000) and positive accumulated E&P of $440,000. Elk distributed $340,000 to its sole shareholder, Barney Rubble, on December 31, 20X3. Barney's tax basis in his Elk stock is $127,500. What is the tax treatment of the distribution to Barney, and what is his tax basis in Elk stock after the distribution?

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The Answer of Elk Company reports a deficit in current E&P of ($270,000) and positive accumulated E&P of $440,000. Elk distributed $340,000 to its sole shareholder, Barney Rubble, on December 31, 20X3. Barney's tax basis in his Elk stock is $127,500. What is the tax treatment of the distribution to Barney, and what is his tax basis in Elk stock after the distribution?

Elk Company Reports a Deficit in Current E&P of ($270,000)