b corp hascurrent ep of 50000 accumulated ep of45000 istri

b corp hascurrent ep of 50000 & accumulated ep of45000 . istribution of 40000 made on 5/1 & another of 60000 on 12/1. B corp files on accrual basis using calendar year didtributions made to sold shareholder. What amount of the accumulated ep is allocate to the 12/1 distribution

Solution

Amount of accumulated E P allocated to the 12/1 distribution is $60,000. Since the B corp. Has current E P of $50,000 and accumulated E P balance of $45,000. Hence the total accumulated EP balance is $95,000 from which distribution of $40,000 made on 5/1 is allocated and E P balance reduced to $65,000 ($95,000 - $40,000) which is sufficient to cover the next distribution on 12/1 of $60,000.