Mulberry Corporation has an August 31 year-end.Mulberry had $50,000 in accumulated E & P at the beginning of its 2009 fiscal year (September 1,2008)and during the year,it incurred a $75,000 operating loss.It also distributed $65,000 to its sole shareholder,Charles,on November 30,2008.If Charles is a calendar year taxpayer,how should he treat the distribution when he files his 2008 income tax return (assuming the return is filed by April 15,2009)?

Question

Quizplus · Accepted Answer

Since current E & P of Mulberry Corporation cannot be determined until the end of its tax year,the amount in current E & P is presumed sufficient to cover the distribution made to Charles.Once current E & P can be determined,he can file for a refund for excess taxes paid on the distribution.

Mulberry Corporation Has an August 31 Year-End