Tiny and Tim each own half of the 100 outstanding shares of Flower Corporation. This year, Flower reported taxable income of $6,000 and was subject to a 25 percent tax rate. In addition, Flower received $20,000 of life insurance proceeds due to the death of an employee (Flower paid $500 in life insurance premiums this year). Flower had $5,000 of accumulated E&P at the beginning of the year.
a) What is Flower’s current E&P?
b) Flower distributed $6,000 on February 15 and $30,000 on August 1. What total amount of dividends will Tiny and Tim report?
c) What amount of capital gain (if any) would Tiny and Tim report on the distributions in part (b) if their stock basis is $2,000 and $10,000, respectively?
d) What form would Flower use to report nondividend distributions?
e) On what form (line) would Tiny and Tim report nondividend distributions?