How much of ashley distribution will be taxed as a dividend

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Reference no: EM13343140

-Ashley and Andrew, equal shareholders in Parrot Corporation, receive $250,000 each in distributions on December 31 of the current year. During the current year, Parrot sold an appreciated asset for $500,000 (basis of $150,000). Payment for the sale of the asset will be made as follows: 50% next year and 50% in the following year, with interest payable at a rate of 7.5%. Before considering the effect of the asset sale, Parrot's current year E & P is $400,000 and it has no accumulated E & P. How much of Ashley's distribution will be taxed as a dividend?

a. $0.
b. $200,000.
c. $250,000.
d. $425,000.
e. None of the above.

 

 

Reference no: EM13343140

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