QUESTION - Earnings & Profits
1. Sopwith Diesel Company had E&P of $32,000 when it distributed land held as an investment with a basis of $10,000, a value of $63,000, but subject to a liability of $22,000 to an individual shareholder. After the distribution, how much is Sopwith's E&P?
2. Yoen, Inc. has an accumulated deficit of $15,000. This year it distributes $20,000 to its shareholders. The current year's books reveal the following items:
Taxable income $12,000
Proceeds from key-man life insurance $10,000
Interest from Iowa City bonds $5,000
Capital loss $4,000
How much of the distribution is a dividend? Show your work?