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21 Cards in this Set

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  • Back
Shareholders who receive distributions may recognize the distribution as
ordinary income
capital gain
no taxable income at all
non liquidating -and non reorganizing- distributions are
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
When a corporation makes a nonliquidating distribuiton the shareholder must answer the following questions
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
When a corporation makes a nonliquidating distribuiton the corporation must answer the following questions
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
Section 301 requires that
a shareholder should include in gross income the amount of any corporate distribution to the extent it is a dividend
qualified dividends received by a non-corporate shareholder in 2003 through 2010 are subject to a maximum ______% tax rate
15%
Sec 317 defines property to include money, securities and any other property except
stock and stock rights of the distributing corporation
Distributed amounts that exceed a corporations E&P are treated as
return of capital that reduces the shareholders basis in the stock (but not below zero)
Distributions that exceed the shareholder's basis are treated as
gain from the sale of stock
The term E&P is determined from
judicial opinions, treasury regulations, and IRC rules regarding how certian transactions affect E&P
dividends are assumed to have been made frist out of ____ and then out of ____
current E&P
accumulated E&P
What must be added to taxable income to compute the Current E&P?
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
What must be subtracted from taxable income to compute the Current E&P?
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
Deductions that are allowed for taxable income purposes that are not allowed for E&P purposes and must be added back are
DRD
NOL, Charitable contribution and Captial loss carryovers
USProd Act deduction
Amortization of organizational expenses
When current E&P is computed taxable income must be changed how in regard to charitible contributions
taxable income must be reduced by any charitable contribution disallowed because of the 10% limitation
premiums paid on insurance polices covering the lives of key corporate personnel are ___ from net income
subtracted from
Capital losses exceeding capital gains are ____from net income for the purpose of figuring E&P
subtracted from
Non dedctible expenses related to the production of tax-exempt income are ___ from net income for the purpose of figuring E&P
subtracted from
Losses on related party sales that are disallowed are ____ from net income for the purpose of figuring E&P
subtracted from
Fines penalties and political contributions are ________ from net income for the purpose of figuring E&P
subtracted from
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
net the two accounts at the time of the distribution