Houghton Company reports negative current E&P of $500,000 and negative accumulated E&P of $800,000. Houghton distributed $100,000 to its sole shareholder,Blossom Applegate,on December 31,year 1.Blossom's tax basis in her Houghton stock is $50,000.What is the tax treatment of the distribution to Blossom and what is her tax basis in Houghton stock after the distribution?

Question

Houghton Company reports negative current E&P of $500,000 and negative accumulated E&P of $800,000.  Houghton distributed $100,000 to its sole shareholder,Blossom Applegate,on December 31,year 1.Blossom's tax basis in her Houghton stock is $50,000.What is the tax treatment of the distribution to Blossom and what is her tax basis in Houghton stock after the distribution?

Quizplus · Accepted Answer

The Answer of Houghton Company reports negative current E&P of $500,000 and negative accumulated E&P of $800,000.  Houghton distributed $100,000 to its sole shareholder,Blossom Applegate,on December 31,year 1.Blossom's tax basis in her Houghton stock is $50,000.What is the tax treatment of the distribution to Blossom and what is her tax basis in Houghton stock after the distribution?

Houghton Company Reports Negative Current E&P of $500,000 and Negative