Cerulean Corporation has two equal shareholders, Eloise and Oil via. Eloise acqu

Question

Cerulean Corporation has two equal shareholders, Eloise and Oil via. Eloise acquired her Cerulean stock three years ago by transferring property worth $700,000, basis of $300,000, for 70 shares of die stock. Olivia acquired 70 shares in Cerulean Corporation two years ago by transferring property worth $660,000, basis of $110,000. Cerulean Corporation's accumulated E & P as of January 1 of the current year is $350,000. On March 1 of the current year, the corporation distributed to Eloise property worth $120,000, basis to Cerulean of $50,000. It distributed cash of $220,000 to Olivia. On July 1 of the current year, Olivia sold her stock to Magnus for $820,000. On December 1 of the current year, Cerulean distributed cash $90,000 each to Magnus and Eloise. What are the tax issues?

Explanation / Answer

CERULEAN CORPORATION ELOISE OLIVIA

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