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What amount of Diego distribution

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Question - Diego owns 70% of Endothon Corporation's stock, while Maria owns the remaining 30%. Diego and Maria have a tax basis in Endothon's stock of $32,000 and $12,000, respectively.

Endothon has current earnings and profits (E&P) of $25,000 and no accumulated E&P. At year-end, Endothon makes a $75,000 distribution: $56,250 to Diego and $18,750 to Maria.

Required - What amount of Diego's distribution is treated as a nontaxable return of capital?

Reference no: EM132946323

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