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 30

Blackhawk Company reports current E P of negative $300,000 and accumulated E P of negative $200,000. Blackhawk distributed $400,000 to its sole shareholder, Melanie Rushmore, on June 30, 2011. Melanie's tax basis in her Blackhawk stock is $75,000.
a. How much of the $400,000 distribution is treated as a dividend to Melanie
b. What is Melanie's tax basis in her Blackhawk stock after the distribution
c. What is Blackhawk's balance in accumulated E P as of January 1, 2012