Auburn Corporation is a calendar year taxpayer. Tom owns one-third (100 shares) of Auburn stock....
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Accounting
Auburn Corporation is a calendar year taxpayer. Tom owns one-third (100 shares) of Auburn stock. His basis in the stock is $12,000. Pam owns two-thirds (200 shares) of Auburn stock. Her basis in the stock is $45,000. On June 10 of the current year, Auburn distributes $25,000 to Tom and $65,000 to Pam.
Determine the tax consequences of the cash distributions to Tom and Pam if current E&P is $32,000 and accumulated E&P is $31,000.
Please be sure to calculate the following for Tom and Pam:
| Distribution |
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| Dividend Income |
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| Remaining Distribution |
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| Return of Capital |
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| Capital gain (loss) |
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| Remaining stock basis |
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