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

Exercise 50

Jayhawk Company reports current E P of $300,000 and accumulated E P of negative $200,000.Jayhawk distributed $400,000 to its sole shareholder, Christine Rock, on December 31, 2011.Christine's tax basis in her Jayhawk stock is $75,000.a.How much of the $400,000 distribution is treated as a dividend to Christine?
b.What is Christine's tax basis in her Jayhawk stock after the distribution?
c.What is Jayhawk's balance in accumulated E P as of January 1, 2012?