Essay
Elk Company reports a deficit in current E&P of ($215,000)and positive accumulated E&P of $330,000. Elk distributed $230,000 to its sole shareholder, Barney Rubble, on December 31, 20X3. Barney's tax basis in his Elk stock is $86,250. What is the tax treatment of the distribution to Barney, and what is his tax basis in Elk stock after the distribution?
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