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Corporation is a calendar-year taxpayer. All of the stock is owned by Fred. His basis for the stock is $35,000. On 3/1 (non-leap year), Corporation distributes $120,000 to Evan. Determine the tax consequences of the cash distribution to Fred in each of the following independent situations.
Current E&P Accumulated E&P
30,000 100,000
50,000 (50,000)
(73,000) 40,000
(20,000) (50,000)
Current E&P Accumulated E&P
30,000 100,000
50,000 (50,000)
(73,000) 40,000
(20,000) (50,000)