Valarie owns 100% of Green Company.Green has earnings and profits of $10,000.The corporation distributes property with a basis of $9,000 and a FMV of $12,000 to Valarie.She must report dividend income of:

A) $2,000.
B) $9,000.
C) $10,000.
D) $12,000.

Question

Paije Sutton · Accepted Answer

Final Answer : C, Explanation :  Valarie must report dividend income of $10,000, which is the amount of the earnings and profits of Green Company. The distribution is considered a dividend to the extent of the corporation's earnings and profits. The basis and FMV of the property distributed do not affect the dividend income amount in this context.

Valarie owns 100% of Green Company.Green has earnings and profits of $10,000.The corporation distributes property with a basis of $9,000 and a FMV of $12,000 to Valarie.She must report dividend income of:

A) $2,000.
B) $9,000.
C) $10,000.
D) $12,000.

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Learning Objectives

Related questions

Valarie owns 100% of Green Company.Green has earnings and profits of $10,000.The corporation distributes property with a basis of $9,000 and a FMV of $12,000 to Valarie.She must report dividend income of:A) $2,000.B) $9,000.C) $10,000.D) $12,000.

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Learning Objectives

Learning Objectives

Related questions

Valarie owns 100% of Green Company.Green has earnings and profits of $10,000.The corporation distributes property with a basis of $9,000 and a FMV of $12,000 to Valarie.She must report dividend income of:

A) $2,000.
B) $9,000.
C) $10,000.
D) $12,000.