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Do you know how to calculate current earnings and profits and the effects of a distribution on a corporation's current earnings and profits and accumulated earnings and profits? If a corporation has too much debt, the IRS may treat debt payments as dividends on preferred stock. Congress plugged one potential loophole that otherwise could be used to convert ordinary income to capital gains when it enacted Section 306. Participants will learn what Section 306 stock is and the special rules that apply to its disposition. Participants will learn ways to transfer assets from a corporation to its shareholders without the transfer being a non-deductible dividend,
how stock dividends are usually not taxable and the circumstances under which stock dividends are taxable, and more.
Key Learning Objectives- Dividend and the income tax effects of receiving a dividend
- Current earnings and profits and how they are assigned to distributions
- How accumulated earning and profits are assigned to distributions
- The tax treatment of distributions that are not out of earnings and profits
- How to determine the amount of a property distribution and the adjusted basis of the property received by a shareholder
- Effects of distribution on the gross income and earnings and profits of the corporation that makes the distribution
- Tax treatment of constructive dividends
- Tax treatment of stock dividends
- How the IRS may reclassify debt of a thinly capitalized corporation as preferred stock and treat the putative interest and principal payments as dividends on preferred stock
- Purpose and application of Section 306
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 | Alan D Campbell
Owner - Campbell Education
Mr. Campbell is a Certified Public Accountant in the states of Arkansas and Florida. He is also a Certified Management Accountant, and he is admitted to practice before the United States Tax Court. He is a member of the American Institute of Certified Public Accountants and the Institute of Management Accountants. | | View More | |
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