Question - This year, Sooner Company reports current E&P of negative $322,000. Its accumulated E&P at the beginning of the year was $260,000. Sooner distributed $520,000 to its sole shareholder. Boomer Wells, on June 30 of this year. Boomer's tax basis in his Sooner stock is $115,500.
a. How much of the $520,000 distribution is treated as a dividend to Boomer?
b. What is Boomer's tax basis in his Sooner stock after the distribution?
c. What is Sooner's balance in accumulated E&P on the first day of next year?