9-how does a corporation\'s computation of earnings and profits differ base on t

Question

9-how does a corporation's computation of earnings and profits differ base on the tax treatment of a stock redemption to shareholders? 

7-when might a shareholder have to rely on the no essentially equivalent to a dividend test in arguing that a stock redemption should be treated as an exchange for tax purposes?  

3-will the shareholders tax basis in noncash property received equal the amount included in gross income as a dividend? under what circumstances will the amounts be different, if any? 

Explanation / Answer

9) Answer: The corporation reduces earnings and profits when the redemption is treated as a dividend with the application of dividend reduction rules. However it reduces earnings and profits at the date of distribution by the percentage of stock redeemed when redemption is treated as an exchange however the amount should not to exceed the property distributed fair market value. If any dividend distributions made during the year, distributing corporation reduces its E&P for redemptions treated as exchanges.

Related Questions

Navigate

• Browse (All)
• Browse 9
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.