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Determine the effect of the distribution on the shareholders

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Reference no: EM132903282

An entity reports the following income for the current year

Operations $92,000

Tax-exempt interest income 19,000

Long-term capital gain 60,000

The entity holds earnings and profits (AAA for an S corporation) of $900,000 at the beginning of the year. A distribution of $200,000 is made to the owners.

Problem 1: Determine the effect of the distribution on the shareholders for the entity. Assume shareholder have sufficient stock basis.

Problem 2: What is the ending E & P of the corporation?

Reference no: EM132903282

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