Assignment Task: Sam, Dean, Bobby and Cass are the shareholders of a C-corporation named Winchester 4'Ever, Inc.
Throughout the current tax year (payment dates provided below), Winchester distributed $70,000 cash to its shareholders (25% to each shareholder):
February 1 - $15,000
May 31 - $15,000
November 30 - $20,000
December 31 - $20,000
The beginning stock basis for each shareholder was as follows:
Sam - $11,000
Dean - $3,000
Bobby - $35,000
Cass - $0
Assume Winchester's current E&P was a negative ($45,000) and its accumulated E&P at the beginning of the year was a positive $35,000. How much of the total $75,000 distribution will be reported as a dividend distribution to the shareholders?
A) $16,250
B) $0
C) $70,000
D) $35,000
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