Clarington Corporation A Calendar Year Taxpayer Has 2 Shareholders Adam

Clarington Corporation, a calendar year taxpayer, has 2 shareholders, Adam and Eve. Adam owns 40 percent and Eve 60 percent of the corporation’s stock. In each of the following situations, determine how the dividends will be taxed to Adam and Eve and if the corporation has any tax consequences.
a. Clarington has $20,000 in CE&P and $10,000 in AE&P. It distributed $15,000 cash to Adam and Eve on July 1.
b. Clarington has $20,000 in CE&P and $10,000 in AE&P. It distributed $25,000 cash to Adam and Eve on July 1.
c. Clarington has $20,000 in CE&P and $10,000 in AE&P. It distributed $35,000 cash to Adam and Eve on July 1.
d. Clarington has $20,000 in CE&P and $10,000 in AE&P. It distributed $15,000 cash to Adam and Eve on June 1 and $15,000 on December 1.
e. Clarington has a $5,000 deficit in CE&P and $10,000 in AE&P. It distributed $10,000 cash to Adam and Eve on July 1.
f. Clarington has $10,000 in CE&P and a $5,000 deficit in AE&P. It distributed $10,000 cash to Adam and Eve on July 1.
g. Clarington has ABC stock valued at $8,000 with a basis of $4,000 that it distributes pro rata to Adam and Eve on July 1. CE&P is $4,000 and AE&P is $3,500.
h. Clarington has XYZ stock valued at $8,000 with a basis of $10,000 that it distributes pro rata to Adam and Eve on July 1. CE&P is $4,000 and AE&P is $3,000.

Posted in Uncategorized