Elk Company reports negative current E&P of $200,000 and positive accumulated E&P of $300,000.Elk distributed $200,000 to its sole shareholder,Barney Rubble,on December 31,year 1.Barney's tax basis in his Elk stock is $75,000.What is the tax treatment of the distribution to Barney and what is his tax basis in Elk stock after the distribution?

Question

Quizplus · Accepted Answer

The Answer of Elk Company reports negative current E&P of $200,000 and positive accumulated E&P of $300,000.Elk distributed $200,000 to its sole shareholder,Barney Rubble,on December 31,year 1.Barney's tax basis in his Elk stock is $75,000.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 Negative Current E&P of $200,000 and Positive