Fact Pattern for Questions 17 and 18. Happy Inc. is a calendar year corporation.

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Fact Pattern for Questions 17 and 18.             Happy Inc. is a calendar year corporation. Happy Inc. had no accumulated earnings and profits, but had $100,000 of current earnings and profits in 2012.  On December 31, 2012, Happy Inc. distributed a total of $160,000 to its two equal shareholders, Betty and Bob.  On the date of the cash distribution, Betty

Fact Pattern for Questions 17 and 18. Happy Inc. is a calendar year corporation. Happy Inc. had no accumulated earnings and profits, but had $100,000 of current earnings and profits in 2012. On December 31, 2012, Happy Inc. distributed a total of $160,000 to its two equal shareholders, Betty and Bob. On the date of the cash distribution, Betty's basis in her Happy Inc. stock was $10,000 and Bob's basis in his Happy Inc. stock was $30,000. How much does Betty include in her gross income for the current taxable year with respect to the distribution to her? $50,000 dividend income and $10 capital gain. $80,000 dividend income and 0 capital gain. $0 dividend income and $70,000 capital gain. $50,000 dividend income and $20,000 capital gain. What is Bob's adjusted basis in his EFG Inc. stock after the distribution?

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