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21 Cards in this Set
- Front
- Back
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Shareholders who receive distributions may recognize the distribution as
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ordinary income
capital gain no taxable income at all |
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non liquidating -and non reorganizing- distributions are
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distributions of cash or property where the shareholder does not distribute any stock
distributions of stiock or rights to aquire stock of the distributing corporation distribuitons of property in exchange for the corporations own stock |
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When a corporation makes a nonliquidating distribuiton the shareholder must answer the following questions
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what is the amount of the distribution
to what extent is this amount considered a dividend what is the basis of the distributed property, and when does the holding period begin |
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When a corporation makes a nonliquidating distribuiton the corporation must answer the following questions
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what are the amount and character of the gain or loss the corporation must recognize
what effect does the distribution have on the distributing corporation's earnings and profits account |
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Section 301 requires that
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a shareholder should include in gross income the amount of any corporate distribution to the extent it is a dividend
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qualified dividends received by a non-corporate shareholder in 2003 through 2010 are subject to a maximum ______% tax rate
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15%
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Sec 317 defines property to include money, securities and any other property except
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stock and stock rights of the distributing corporation
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Distributed amounts that exceed a corporations E&P are treated as
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return of capital that reduces the shareholders basis in the stock (but not below zero)
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Distributions that exceed the shareholder's basis are treated as
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gain from the sale of stock
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The term E&P is determined from
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judicial opinions, treasury regulations, and IRC rules regarding how certian transactions affect E&P
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dividends are assumed to have been made frist out of ____ and then out of ____
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current E&P
accumulated E&P |
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What must be added to taxable income to compute the Current E&P?
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tax exempt income(including interest income and proceeds from life insurance payout) must be ADDED TO TAXABLE INCOME
recoveries of bad debts and other deductions that the company received no tax benefit federal income tax refunds from prior years dividends received deduction NOL carryovers US production activities deduction |
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What must be subtracted from taxable income to compute the Current E&P?
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federal income taxes must be deducted from TAXABLE INCOME
premiums on life insurance contracts that the company is named the beneficiary excess captial losses and charitable deductions that are not currently deductible expenses related to the production of tax exempt income nondeductible losses on sales to related parties nondeductible penalties and fines, political contributions and lobbbying expenses |
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Deductions that are allowed for taxable income purposes that are not allowed for E&P purposes and must be added back are
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DRD
NOL, Charitable contribution and Captial loss carryovers USProd Act deduction Amortization of organizational expenses |
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When current E&P is computed taxable income must be changed how in regard to charitible contributions
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taxable income must be reduced by any charitable contribution disallowed because of the 10% limitation
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premiums paid on insurance polices covering the lives of key corporate personnel are ___ from net income
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subtracted from
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Capital losses exceeding capital gains are ____from net income for the purpose of figuring E&P
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subtracted from
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Non dedctible expenses related to the production of tax-exempt income are ___ from net income for the purpose of figuring E&P
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subtracted from
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Losses on related party sales that are disallowed are ____ from net income for the purpose of figuring E&P
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subtracted from
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Fines penalties and political contributions are ________ from net income for the purpose of figuring E&P
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subtracted from
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If a corporation has a current E&P deficit and a positive accumulated E&P balance it must _____ at the time of the distribution to determine the dividend amount
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net the two accounts at the time of the distribution
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