Question 158.How does the payment of a property dividend affect E & P?

158.How does the payment of a property dividend affect E & P?

159.Goldfinch Corporation distributes stock rights to its shareholders. How is the basis of the stock rights received by Goldfinch’s shareholders determined?

160.Briefly describe the rationale for the reduced tax rate on dividends for individual taxpayers.

161.Christian, the president and sole shareholder of Venture Corporation, is paid an annual salary of $150,000. Christian would like to draw additional funds from the corporation but is concerned that increased salary might cause the IRS to contend his salary is unreasonable. Further, Christian does not want the corporation to pay any dividends. He would like to contribute $40,000 to his alma mater to establish scholarships for needy students. If Christian makes a pledge to the university to provide $40,000 for scholarships, would there be a problem if Venture Corporation paid the pledge on his behalf? Explain.

162.Briefly define the term “earnings and profits.”

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163.Provide a brief outline on computing current E & P.

164.In general, how are current and accumulated earnings and profits allocated to corporate distributions?

165.Briefly discuss the rules related to distributions of non-cash property.

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