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  3. paul and pete each owned 50% of white corporation

Paul and Pete each owned 50% of White Corporation on January 1, 20X7. Paul sold...

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Accounting

Paul and Pete each owned 50% of White Corporation on January 1, 20X7. Paul sold his stock to Polly in September of 1997. White Corporation has E&P of $10,000 on January 1, 20X7. Its current E&P for 20X7 is $50,000 (prior to any distribution). White distributed $40,000 in dividends on July 1 ($20,000 to Paul and $20,000 to Pete). It distributed another $40,000 in December ($20,000 to Pete and $20,000 to Polly). Paul has taxable income as a result of the distributions from White Corporation in 20X7 of

a. $5,000.

b. $15,000.

c. $17,500.

d. $20,000.

e. None of the above.

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