Houghton Corporation Reports Negative Current E&P of $500,000 and Negative

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The Answer is $0 dividend to Blossom, $50,000 nontaxable return of capital, and $50,000 capital gain.Her tax basis in Houghton stock is $0.
No part of the distribution is treated as a dividend because both current and accumulated E&P are negative.The first $50,000 of the distribution is a nontaxable return of capital and the remaining $50,000 is treated as gain from sale of stock.Her tax basis in Houghton stock is $0.

Houghton Corporation Reports Negative Current E&P of $500,000 and Negative

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Houghton Corporation Reports Negative Current E&P of $500,000 and Negative

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