Someone recently bought our

students are currently browsing our notes.


Nonliquidating Distributions Outline

Law Outlines > Corporate Tax (Duke Zelenak) Outlines

This is an extract of our Nonliquidating Distributions document, which we sell as part of our Corporate Tax (Duke Zelenak) Outlines collection written by the top tier of Duke University School Of Law students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Corporate Tax (Duke Zelenak) Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Nonliquidating Distributions I.


Section 316(a) defines a dividend as any distribution of property made by a corporation to its shareholders out of accumulated earnings and profits, or current earnings and profits. a. 301(c)(1) when a corporation makes distribution, first treated as dividend to the extent of E&P. (taxed at capital gain rate, 15% or 20%, cannot be deducted by capital loss) b. 302(c)(2) if it exceeds E&P, then a tax-free recovery of SH's stock basis. (0%) c. 301(c)(3) if it still exceeds basis, treated as capital gain. (actual capital gain, taxed at capital gain rate, 15% or 20%, this can be deducted by capital loss) Earnings and Profits a. Start with taxable income b. Add back certain excluded items i. Municipal interest c. Add back certain deductible items i. Section 243 dividends received deductions d. Subtract certain nondeductible items i. Federal income tax ii. capital losses in excess of capital gains e. Make timing adjustments i. +ACRS- alternative (Alternative depreciation system)

1. Straight line method

2. Use class life Problem on 158: a. taxable income 8,450 i. +: 27.5

1. 20 gross profit

2. 2.5 LTCG

3. 5 dividends (Section 243 - when a corporation receives dividends from another corporation) a. More than 80% of IBM: 100% dividends deduction b. 20%- 80% of IBM: 80% dividends deduction c. Less than 20%: 70% dividends deduction ii. -: 19.05

1. 10.25 salaries

2. 2.8 ACRS

3. 2.5 LTCL only deductible against LTCG

4. 3.5 Section 243 deduction of 70% of dividends b. E&P: 13,450 i. 8450 ii. +3000, SS103 interest iii. +3500, SS243 dividend (70%) iv. -800, Federal income tax v. -2,500, LTCL vi. +1800 ACRS adjustment

Buy the full version of these notes or essay plans and more in our Corporate Tax (Duke Zelenak) Outlines.