Analysis of Taxation in Business Entities

AC 404Taxation of Business EntitiesChapter Four Graded ProblemsSpring, 2022 Name ___________________________________________ Instructions: For each of the following computational and non-noncomputational multiple choice questions, research all topics and prepare all required computations to enable oneself to correctly select answers for each problem. Then, check the box next to the best answer for each question. You should complete your manual work on a separate computational sheet of paper, ONLY AFTER COMPLETING CHAPTER FOUR GRADED PROBLEMS DOWNLOAD are to you proceed to the module for Chapter Four Grade Problems Answers to be submitted in Canvas. You will then submit your answers in Canvas in the assignment area labeled Chapter Four Graded Problems Answers to be submitted in Canvas. Since Canvas shuffles the order of each question's answers, please be sure to indicate your answers accurately in Canvas. After the assignment answers have been submitted, Canvas will present explanations of correct answers to all problems/questions, even if you answered with a correct answer. Questions One and Two On December 31st, Delta Corporation distributes $90,000 in cash to each of its two equal shareholders, Sarah and Matt. At the time of the distribution, Delta's E&P is $120,000. Sarah's basis in her stock is $40,000, and Matt's basis in his stock is $20,000. 1.For Sarah, Delta's distribution of $90,000 to her is characterized as follows. DividendsReturn of CapitalCapital Gain 90,00000 60,00030,0000 60,00020,00010,000 60,00010,00020,000 2.For Matt, Delta's distribution of $90,000 to him is characterized as follows. DividendsReturn of CapitalCapital Gain 90,00000 60,00030,0000 60,00020,00010,000 60,00010,00020,000 3.(Tested on Prior Test) Oreo Corporation has accumulated E & P of $7,000 at the beginning of the current year. During the year, the corporation incurs a current E & P deficit of $(10,000). The corporation distributes $12,000 at the end of the year to Morris, its sole shareholder. At year end, Oreo's reported dividends, return in capital, and ending accumulated E & P are DividendsReturn of CapitalEnding Accum. E & P 012,000(3,000) 12,0000(15,000) 7,0005,000(3,000) 7,0005,000(10,000) 4.(Tested on Prior Test) Glenbrooke Corporation has accumulated E & P deficit of $(5,000) at the beginning of the current year. During the year, the corporation incurs a current E & P of $14,000. The corporation distributes $16,000 at the end of the year to Fred, its sole shareholder. At year end, Glenbrooke's reported dividends, return in capital, and ending accumulated E & P are DividendsReturn of CapitalEnding Accum. E & P 14,0002,000(5,000) 9,0007,0000 16,0000(7,000) 14,0000(3,000)