Homework: Advanced Taxation
Topic: Corporate Distributions
For some of these problems, there is no "right" or "wrong" answer. I am looking for a few sentences on your thought process why you came up with the response you did.
Problem I
XYZ Corp., a Delaware corporation, earned $100,000 in profits in 2021. To reward shareholders, the board of directors declared and paid a $1 distribution per share to each of its shareholders.
• Jodi K. owns 10% of the shares of XYZ Corp. and receives a distribution of $10,000. What is the U.S. tax on Jodi K.'s distribution from XYZ Corp.?
• ABC Corp., a New York corporation, owns 10% of the shares of XYZ Corp. and receives a distribution of $10,000. What is the U.S. tax on ABC Corp.'s distribution from XYZ Corp.?
Problem II
SAB Corp., a Delaware corporation, lost an accumulated $100,000 prior to 2021. In 2021, it earned $50,000 in profits. To reward shareholders, the board of directors declared and paid a $1 distribution per share to each of its shareholders. Larry G. owns all of the shares of SAB Corp. and receives a distribution of $70,000. The adjusted tax basis in Larry's shares is $100,000. What is the U.S. tax on Larry's distribution from SAB Corp.?
Problem III
Top. Inc., a New York corporation, is in the process of being liquidated. Top Inc. has two shareholders: (i) GEF Corp., a Delaware corporation, which owns 90% of the stock ($9,000 basis), and (ii) Harriet R, who owns 10% of the stock ($1,000 basis). After selling almost of all its assets, Top Inc. distributes cash ($100,000 total) to its shareholders. GEF Corp. receives $90,000 and Harriet receives $10,000.
• What is the U.S. tax on to GEF on the liquidation of Top Inc.?
• What is the U.S. tax on to Harriet on the liquidation of Top Inc.?
Format your homework according to the give formatting requirements:
1. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the homework, the course title, the student's name, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.