Solved: Their basis in the stock is 8000 for sarah and 32000 for, Accounting Basics

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Their basis in the stock is 8000 for sarah and 32000 for

Question - At the start of the current year, Indigo Corporation (a calendar year taxpayer) has accumulated E & P of $240,000. Indigo's current E & P is $160,000, and at the end of the year, it distributes $440,000 ($220,000 each) to its equal shareholders, Sarah and Mason. Their basis in the stock is $8,000 for Sarah and $32,000 for Mason. How is the distribution treated for tax purposes?

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Accounting Basics: Their basis in the stock is 8000 for sarah and 32000 for

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Accounting Basics: Their basis in the stock is 8000 for sarah and 32000 for

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