[Tcohle]

If it’s a C Corp and say there is 100K Accum E&P and 200K Current E&P.

Shareholders we need to figure out Accum e&p Current E&P, etc.:
A-20%
B-10%
C-10%

Corp says distribution of 500K total for shareholders.

The correct procedure is to:

1. Get total distributions for A, B, and C by multiplying % ownership by distribution total.
2. Multiply Shareholder % by Accum E&P and Current E&P to see what their share of the excess earnings is.
3. For each S/H use steps 1 and 2, run through Current E&P, then Accum E&P, then Return of basis, then capital gain.

Are steps 1 and 2 correct? It seems like that would be the fair way determine the amount to complete step 3 because it’s not like you’d give A,B, and C all 500K of distributions from the company. And you can’t give all Accum E&P and current E&P either. It would make sense to distribute those as if they were profits at the end of the year.

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[Anonymous]

Wouldn't it be easier to say there is $300k of E&P ($200k current + $100k accumulated), and therefore $200k is basis/gain? Then A is $40k basis/gain, B is $20k, and C is $20k.

[Author]

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