This year, Sooner Company reports a deficit in current E&P of ($314,000). Its accumulated E&P at the beginning of the year was $278,000. Sooner distributed $556,000 to its sole shareholder, Boomer Wells, on June 30 of this year. Boomer’s tax basis in his Sooner stock before the distribution is $95,500.
A. How much of the $556,000 distribution is treated as a dividend to Boomer?
B. What is Boomer’s tax basis in his Sooner stock after the distribution?
C. What is Sooner’s balance in accumulated E&P on the first day of next year?