Explain the tax treatment of the distributions in both

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Reference no: EM13140304

On December 24th of the preceding year, Yonkers and Ann incorporated Akona with contributions of $100.00 cash each. On December 31st of the preceding year, Akona made a $5.00 distribution to each shareholder. There was no income or expenses in the preceding year. In the current year, Akona again made $5.00 distributions to each shareholder. Please explain the tax treatment of the $5.00 distributions in both years to all parties.

Reference no: EM13140304

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