X inc distributed following property on Dec 15 2013 to its only s/h Joe. Only distribution made this year. At time of distribution X inc had a deficit in accumulate E&P of $32,000 and had current E&P (excluding the property distribution) of $35,000. FMV of property distributed= $137,000, Adj. tax basis of property= $145,000, liability distributed with property= $100,000, Joe’s stock basis prior to distribution= $12,000
a) How much does X inc E&P decrease from the distribution of the property? ($45,000? or is it limited to $35,000?)
b)X inc’s accumulated E&P on 1/1/14? (still a deficit of $32,000?)
c)how should joe treat the distribution on his 2013 tax return? (dividend income?)
d)Joes’ basis in the property received? ($137,000? bc it’s equal to the FMV?)
e)Joe’s stock basis after the distribution? ($2,000?…12,000-10,000)
f)Joe’s journal entry recording the receipt of the property?
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