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Sparrow Corporation is a calendar year taxpayer. At the beginning of the current year, Sparrow...

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Finance

Sparrow Corporation is a calendar year taxpayer. At the beginning of the current year, Sparrow has accumulated E & P of $33,000. The corporation incurs a deficit in current E & P of $46,000 that accrues ratably throughout the year. On June 30, Sparrow distributes $20,000 to its sole shareholder, Libby. If Libbys stock has a basis of $4,000, how much of the distribution is a taxable dividend , a return of capital and a taxable gain ?

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