Please help me with my homework. I am completely lost. Thanks in advance! I will
ID: 2405095 • Letter: P
Question
Please help me with my homework. I am completely lost. Thanks in advance! I will rate.
At the beginning of the year, Clampett, Inc. had $100,000 in its AAA, $60,000 of earnings and profits from prior C corportion years. During the year, Clampett, Inc. earned $50,000 of ordinary income and paid $200,000 in distributions to its shareholders. Assume that J.D. owns 25% of Campett, Inc., his basis in Clampett, Inc. at the beginning of the year is $30,000, and his share of the distribution was $50,000. How much, if any, of the distribution is taxable as a dividend?
Explanation / Answer
The distribution that is taxable as a dividend = $12500
J.D. owns 25% of Campett, Inc.
his share of the distribution was $50,000
Therefore, distribution taxable as a dividend = 50000*25% =12500