McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 17

Hawkeye Company reports current E P of $300,000 in 2011 and accumulated E P at the beginning of the year of $200,000. Hawkeye distributed $400,000 to its sole shareholder, Ray Kinsella, on December 31, 2011. Ray's tax basis in his Hawkeye stock is $75,000.
a. How much of the $400,000 distribution is treated as a dividend to Ray
b. What is Ray's tax basis in his Hawkeye stock after the distribution
c. What is Hawkeye's balance in accumulated E P as of January 1, 2012