From Current E & P From Accumulated E & P Treated as Return of Capital April 30 distribution of $211,200 144,000 X 67,200 X 0 December 31 distribution of $369,600 252,000 X 64,800 X 52,800
From Current E & P From Accumulated E & P Treated as Return of Capital April 30 distribution of $211,200 144,000 X 67,200 X 0 December 31 distribution of $369,600 252,000 X 64,800 X 52,800
Chapter19: Corporations: Distributions Not In Complete Liquidation
Section: Chapter Questions
Problem 22CE
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Transcribed Image Text:On January 1 of the current year, Rhondell Corporation has accumulated E & P of $132,000. Current E & P for the year is $396,000, earned
evenly throughout the year. Elizabeth and Jonathan are sole equal shareholders of Rhondell from January 1 to April 30. On May 1, Elizabeth
sells all of her stock to Marshall. Rhondell makes two distributions to shareholders during the year: a total of $211,200 ($105,600 to
Elizabeth and $105,600 to Jonathan) on April 30 and a total of $369,600 ($184,800 to Jonathan and $184,800 Marshall) on December 31.
Determine the allocation of the distributions by completing the table below. Assume that the shareholders have sufficient basis in their
stock for any amount that is treated as return of capital.
If an amount is zero, enter "0". If required, round any division to two decimal places and use in subsequent computations.
Round final answers to the nearest dollar.
From Current
E & P
From Accumulated
E & P
Treated as
Return of Capital
April 30 distribution of $211,200
144,000 X
67,200 X $
0
December 31 distribution of $369,600
252,000 X
64,800 X $
52,800✔
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