At the beginning of the current (non-leap) year, Jacques owns all of Lighthouse
ID: 2539542 • Letter: A
Question
At the beginning of the current (non-leap) year, Jacques owns all of Lighthouse Supply Corporation's outstanding stock. His basis in the stock is $65,000. On July 1, he sells all his stock to Rich for $122,000. During the year, Lighthouse Supply, a calendar year taxpayer, makes two cash distributions: $55,000 on March 1 to Jacques and $96,000 on September 1 to Rich.
Consider the following independent situations:
a.
Current E&P of $44,000; accumulated E&P of $38,000.
b.
Current E&P of $110,000; accumulated E&P (deficit) of $(54,000)
c.
Current E&P (deficit) of $(42,000); accumulated E&P of $128,000.
Fill in all tables. Numbers and names from previous problem to show set up. Names should be (1) Jacques and (2) Rich
a.
Current E&P of $44,000; accumulated E&P of $38,000.
b.
Current E&P of $110,000; accumulated E&P (deficit) of $(54,000)
c.
Current E&P (deficit) of $(42,000); accumulated E&P of $128,000.
Begin by completing the table for the distributions. (Complete al answer boxes. For zero amounts, make sure to enter "O" in the appropriate cell. Use a 365-day year for computations. Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar.) Current E and P Retum Situation Individual Date E and P income of capital 38,000 49,597$ Mar 1 S Sep 1 4,403 74,597 79,000 18,483 32,517 51,000 Harris S 11,597 $ Mozzie 99,00 70,000 $ 149,000 32,000 $ 54.000 95,0002 35,517 $ 62,483 98,000 $ Mar 1 $ 35,517 $ b. Mozzie Sep1 Total Harris Mozzie Sep 1 98,000 $ 54,000 $ 33,364 87,364 $ 149,000 S 54,000 54,000 $ 33,364 87,364 $ Mar 1 $ C. 95,000 61,636 149,000 S o $ 61,636Explanation / Answer
Statement showing Distribution Amount in Dividend & Return On Capital Situation Individual Date Distribution Amount Current E&P Accumulated E&P Dividend Return on Capital a. Jacues Mar-01 $55,000 $16,026 $38,000 $54,026 $974 Rich Sep-01 $96,000 $27,974 $27,974 $68,026 Total $151,000 $44,000 $38,000 $82,000 $69,000 b. Jacues Mar-01 $55,000 $40,066 $40,066 $14,934 Rich Sep-01 $96,000 $69,934 $69,934 $26,066 Total $151,000 $110,000 $110,000 $41,000 c. Jacues Mar-01 $55,000 $0 $55,000 $55,000 $0 Rich Sep-01 $96,000 $0 $73,000 $73,000 $23,000 Total $151,000 $0 $128,000 $128,000 $23,000 Statement Showing Jacues's Gain and and Character Situation Total Gain Character a. $57,974.00 Capital Gain b $71,934.00 Capital Gain c. $57,000.00 Capital Gain Statement Showing Stock Basis at end of year Situation Stock Basis at year end a $53,000.00 b $95,934.00 c $99,000.00
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