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What is the effect of the distribution

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Question - On January 1, Tulip Corporation (a calendar year taxpayer) has accumulated earnings and profits of $300,000. Its current earnings and profit for the year is $90,000 (before considering dividend distributions). During the year, Tulip distributes $60,000 ($300,000 each) to its equal shareholders, Anne and Tom. Anne has a basis in her stock of $65,000, and Tom's basis is $120,000. What is the effect of the distribution by Tulip Corporation on Anne and Tom?

Reference no: EM132426812

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