Reference no: EM132596434

Question - Tiny and Tim each own half of the 100 outstanding shares of Flower Corporation. This year, Flower reported taxable income of $6,000. In addition, Flower received $20,000 of life insurance proceeds due to the death of an employee (Flower paid $500 in life insurance premiums this year). Flower had $5,000 of accumulated E&P at the beginning of the year. Assume a tax rate of 21%. (Leave no answer blank. Enter zero if applicable.)

a. What is Flower's current E&P?

b. Flower distributed $6,000 on February 15 and $30,000 on August 1. What total amount of dividends will Tiny and Tim report? (Do not round intermediate calculations.)

c. What amount of capital gain (if any) would Tiny and Tim report on the distributions in part (b) if their stock basis is $2,000 and $10,000, respectively? (Do not round intermediate calculations.)