Corporate income tax distributions

timer Asked: Jul 13th, 2015

Question Description

X inc distributed following property on Dec 15 2013 to its only s/h joe. Only distribution made this year. At time of distribution X inc had a deficit in accumulate E&P of $32,000 and had current E&P (excluding the property distribution) of $35,000. 
FMV of property distributed= $137,000 
Adj. tax basis of property= $145,000 
liability distributed with property= $100,000 
Joe's stock basis prior to distribution= $12,000

Update 2: a) How much does X inc E&P decrease from the distribution of the property? ($45,000? or is it limited to $35,000?) 

b)X inc's accumulated E&P on 1/1/14? (still a deficit of $32,000?) 

c)how should joe treat the distribution on his 2013 tax return? (dividend income?) 

d)Joes' basis in the property received? ($137,000? bc it's equal to the FMV?) 

e)Joe's stock basis after the distribution? ($2,000?...12,000-10,000) 

f)Joe's journal entry recording the receipt of the property?

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