CHAPTER 4 CORPORATIONS: EARNINGS AND PROFITS AND DIVIDEND DISTRIBUTIONS

PROBLEMS 23. George and Albert have ordinary dividend income of $130,000 each [$200,000 (Swan Corporations accumulated E & P) + $60,000 (Swan Corporations current E & P) 2]. The remaining $20,000 of the $280,000 distribution reduces the basis (up to $10,000 each) in the shareholders stock in Swan Corporation with any excess treated as a capital gain. George reduces his basis from $48,000 to $38,000. Albert has a reduction in stock basis from $8,000 to zero and a capital gain of $2,000. Example 1 a. Cardinal reports the $400,000 dividend as taxable income but has a dividends received deduction under 243 of $280,000 (70% X $400,000). None of the other items affect taxable income. Thus, taxable income is $370,000 ($250,000 + $400,000 dividend - $280,000 dividends received deduction). Cardinal Corporations E & P as of December 31 is $770,000, computed as follows: $90,000 (beginning balance in E & P) + $370,000 (taxable income) + $280,000 (dividends received deduction) + $60,000 (tax-exempt interest) $30,000 (interest on indebtedness to purchase tax-exempt bonds).

24.

b.

pp. 4-3 and 4-4 25. Buck reports $300,000 as a taxable dividend. The $550,000 gain on the sale of the land increases E & P by that amount in 2002. The E & P balance prior to the $300,000 distribution is $150,000 [$550,000 (gain on sale) - $280,000 (accumulated deficit) $120,000 (current year deficit)]. Current E & P before the distribution is $430,000 [$550,000 (gain on sale) - $120,000 (current year deficit)]. Since there is adequate current E & P, the entire distribution is a dividend. p. 4-5 and Example 6 Dividend income is $100,000, $20,000 is a tax-free recovery of basis, and $180,000 is taxed as capital gain. To determine the amount of dividend income, the balances of both accumulated and current E & P as of June 30 must be netted because of the deficit in current E & P. One half of the loss, or $150,000, is deemed to have occurred by June 30; thus, the $250,000 in accumulated E & P is reduced by $150,000. The $100,000 balance remaining in E & P triggers dividend income. The remaining $200,000 of the distribution is a recovery of capital, reducing basis to zero and then triggering capital gain. Example 11 4-1

26.

4-2 27. a. Amount Taxable

2003 Annual Edition/Solutions Manual Return of Capital Accumulated E & P and current E & P are netted on the date of distribution. There is a dividend to the extent of any positive balance. Taxed to the extent of current E & P. to the extent E & P. of current and accumulated

$ 70,000$80,000

b. c. d. e.

$ 40,000$50,000 $220,000$ -0- Taxed $ 80,000$40,000 $110,000 $10,000

Accumulated E & P and current E & P netted on date of distribution. When the result in current E & P is a deficit for the year, the deficit is allocated on a pro rata basis to distributions made during the year. On June 30, E & P is $110,000 [current E & P is a deficit of $30,000 (i.e., 1/2 of $60,000) netted with accumulated E & P of $140,000].

pp. 4-6 to 4-1028. Amount Taxable a. $120,000 Capital Gain $10,000 Taxed to the extent of current E & P. Capital gain to extent distribution exceeds E & P plus stock basis. Taxed to the extent of current and accumulated E & P. Taxed to the extent of current E & P. Accumulated E & P and current E & P are netted on the date of distribution. There is a dividend to the extent of any positive balance. When the result in current E & P is a deficit for the year, such deficit is allocated on a pro rata basis to distributions made during the year. Thus, on June 30, current E & P is a deficit of $80,000 (i.e., 1/2 of $160,000). This is netted with accumulated E & P of $210,000 to cause all of the distribution to be taxed.

b. c. d.

$100,000 $ 70,000 $ 50,000

$ -0$ -0$20,000

e.

$ 90,000

$ -0-

pp. 4-6 to 4-10

Corporations: Earnings and Profits and Dividend Distributions 29.

4-3

The $90,000 in current E & P is allocated on a pro rata basis to the two distributions made during the year; thus $45,000 of current E & P is allocated to Maries distribution and $45,000 is allocated to Juans distribution. Accumulated E & P is applied in chronological order beginning with the earliest distribution. Thus, the entire accumulated E & P balance of $100,000 is allocated to Maries distribution. As a result, $145,000 ($100,000 AEP + $45,000 current E & P for one-half of the year) of Maries July 1 distribution is taxed as dividend income. The remaining $15,000 of the $160,000 distribution reduces Maries stock basis to $25,000 ($40,000 original basis - $15,000 recovery of capital). Marie then recognizes a capital gain of $125,000 on the sale of the stock [$150,000 (sales price) - $25,000 (remaining stock basis)]. Of the $160,000 distributed to Juan, $45,000 will be treated as a dividend. The remaining $115,000 will reduce Juans stock basis to $35,000 [$150,000 (original cost) - $115,000 (reduction in basis from the distribution)]. pp. 4-6 to 4-10 Taxable Income Increase (Decrease) a. b. c. d. e. f. $20,000 No effect No effect No effect No effect $25,000 E&P Increase (Decrease) ($20,000) ($27,000) ($ 7,500) ($43,000) ($ 8,500) $ -0-

30.

Note: E & P is not increased in f. because the $25,000 has already been included in taxable income. The realized gain is not an increase in E & P, only the recognized gain that is included in taxable income. Concept Summary 4-1 31. a. b. c. d. e. f. g. h. i. * ** Taxable Income Increase (Decrease) No effect ($30,000) $50,000 $ 3,000 $30,000 ($12,000) No effect ($80,000) No effect E&P Increase (Decrease) ($ 40,000) * $ 26,000 ** $150,000 $ 7,000 *** No effect $ 9,600 ($ 2,400) $ 30,000 $ 60,000

While the related party loss is not deductible under the income tax, it must be subtracted from E & P. Although intangible drilling costs are deductible in full under the income tax, they must be amortized over 60 months when computing E & P. Since $500 per month is amortizable ($30,000/60 months), $4,000 is currently deductible for E & P purposes ($500 X 8 months). Thus, of the $30,000 income tax deduction, $26,000 must be added back to E & P ($30,000 - $4,000 deduction allowed).

4-4 ***

2003 Annual Edition/Solutions Manual The receipt of a $10,000 dividend will generate a dividends received deduction of $7,000. The net effect on taxable income is an increase of $3,000. For E & P purposes, the dividends received deduction must be added back. Only 20% of current-year 179 expense is allowed for purposes of E & P. Thus, 80% of the amount deducted for income tax purposes is added back. In each of the four succeeding years, 20% of the 179 expense is allowed as a deduction for E & P purposes. Only ADS straight-line depreciation reduces E & P; thus, E & P is increased by $30,000, which is the excess of MACRS depreciation taken over the amount allowed under ADS.

Concept Summary 4-1 32. a. Pelican has a gain of $75,000 on the distribution, computed as follows: $225,000 (liability on the property exceeds fair market value) - $150,000 (basis of the property). Pelicans E & P is increased by the $75,000 gain. In addition, E & P is decreased by $225,000 (representing the deemed fair market value of the property), reduced by the $225,000 liability on the property, or zero. Thus, E & P is $375,000, computed as follows: $300,000 (beginning E & P balance) + $75,000 (gain on distribution). Ginger has dividend income of zero, computed as follows: $225,000 (value of the property based on liability) - $225,000 (liability on the property). Ginger has a basis of $225,000 in the property.

b.

pp. 4-10 to 4-12 33. a. Dividend income to Orca is $80,000 [$110,000 (fair market value of the property) - $30,000 (liability assumed)]. The amount taxed to Orca is reduced by the dividends received deduction. Orcas basis in the property is $110,000. The distribution reduces Penguins E & P account by $120,000 [$150,000 (adjusted basis of the property) - $30,000 (liability assumed by Orca)].

b. c.

pp. 4-10 to 4-12 34. To determine the taxability of the $35,000 distribution, the balance of both accumulated and current E & P as of July 1 must be determined and netted. This is necessary because of the deficit in current E & P. One-half of the $30,000 loss, or $15,000, reduces E & P to $25,000 as of July 1 ($40,000 - $15,000). Thus, of the $35,000 distribution, $25,000 is taxed as a dividend and $10,000 represents a return of capital. Example 11 Crossbill Corporation recognizes a gain of $140,000 on the distribution. Crossbills E & P is reduced by $145,000 [$180,000 (fair market value) - $35,000 (liability)]. Janel has a taxable dividend of $145,000 [$180,000 (fair market value) - $35,000 (liability)]. The basis of the equipment to Janel is $180,000. pp. 4-10 to 4-12

35.

Corporations: Earnings and Profits and Dividend Distributions 36.

4-5

Homer has a taxable dividend of $60,000 and a basis in the land of $60,000. Gold Corporation does not recognize a loss on the distribution. Golds E & P is reduced by $100,000. pp. 4-10 to 4-13 What basis do Cybil and Sally have in their stock in Copper Corporation after their initial transfers for stock? Does Sallys transfer qualify under 351 of the Code as a nontaxable exchange? How is Copper Corporation taxed on the property distribution to Cybil? How do the distributions to Cybil and to Sally affect Coppers E & P? How will Cybil and Sally be taxed on the distributions? What is Cybils basis in her stock when she sells it to Dana? How are Cybil and Dana taxed on the $80,000 distribution to each?

37.

pp. 4-2 to 4-13 and Chapter 3 38. a. The result of this transaction is, in effect, a realized loss of $15,000 (the difference between basis of $33,000 and fair market value of $18,000) and a constructive dividend of $13,000 (the difference between the $18,000 fair market value and the $5,000 paid for the parking lot). Due to the application of 267, Redwing cannot recognize the realized loss. However, the loss does reduce Redwings E & P. The constructive dividend also reduces E & P. Thus, E & P is reduced by $28,000 (the sum of the $15,000 disallowed loss and the $13,000 constructive dividend). The loan to Royce will generate imputed interest since no interest was charged. The amount of imputed interest will be $9,000 ($200,000 X 9% X year). This amount will be deemed paid as interest from Royce to the corporation. The deductibility of the interest by Royce will depend upon how the loan proceeds are used. Redwing will have taxable interest income of $9,000. Finally, Redwing will be deemed to pay a dividend to Royce equal to the amount of interest. Redwings E & P will be increased by the amount of interest income and reduced by the amount of deemed dividend payment. Bargain rentals create constructive dividends to shareholders. In the present case, the amount of constructive dividend to both Mike and Royce equals the fair rental value of the yacht. Thus, both shareholders will receive dividend income of $30,000 ($7,500 X 4 weeks) and Redwings E & P will be reduced by the same amount. The $7,000 excess amount ($20,000 - $13,000) paid to Mike by Redwing over the fair rental value of the equipment will be treated as a constructive dividend taxable to Mike. The dividend will also reduce Redwings E & P.

b.

c.

d.

pp. 4-13 to 4-15

4-6 39. a. b.

2003 Annual Edition/Solutions Manual Taxable income to Lea is $20,000 [$100,000 (value of the property) - $80,000 (liability)]. Corporate E & P after the distribution is $77,350, computed as follows: Beginning E & P Add: Taxable income $320,000 Proceeds of term life insurance 46,400 Subtract: Federal income tax (108,050) Life insurance premiums (2,000) Property distribution (220,000) * Prior year installment sale income (10,000) E & P of Plover after the distribution * $51,000

26,350 $77,350

E & P is reduced by the greater of the fair market value ($100,000) or adjusted basis of the property ($300,000), less the amount of liability on the property ($80,000).

c. d.

The tax basis of the property to Lea is $100,000. If Plover had sold the business property at its $100,000 fair market value, it would have recognized a loss of $200,000. This loss would offset $200,000 of taxable income in the current year, creating Federal tax savings of $78,000 ($200,000 X 0.39). After paying off the $80,000 loan, Plover would have a total of $98,000 to distribute to Lea [$78,000 (tax savings) + $100,000 (sales proceeds) - $80,000 (loan balance)]. Immediately following the property sale, Plovers E & P balance would be: Beginning E & P Add: Taxable income $120,000 Proceeds of term life insurance 46,400 Subtract: Life insurance premiums (2,000) Federal income tax (30,050) Income from prior year installment sale (10,000) E & P of Plover after the distribution $ 51,000

124,350 $175,350

Thus, Lea recognizes a taxable dividend of $98,000. Plovers E & P would be reduced to $77,350 after the distribution. Note that this result is superior to a distribution of the property to Lea. In particular, the corporation receives a $200,000 deduction, while Leas income is only increased by $78,000. Concept Summary 4-1 and Examples 2, 13, and 19 40. a. Verdigris Corporation has dividend income of $10,000 [$60,000 (fair market value of the land) less $50,000 (liability on the land)]. The $10,000 is subject to the dividends received deduction under 243 of $8,000, so that only $2,000 is taxed to Verdigris Corporation. Verdigris Corporation has a basis of $60,000 in the land.

Corporations: Earnings and Profits and Dividend Distributions b.

4-7

Rust Corporation may not deduct the loss on the land. Its E & P is reduced by $40,000, the $90,000 basis of the land (which is greater than the fair market value) less the $50,000 liability on the land.

Examples 13 and 19 41. Taxable income: Income from services rendered Dividend income Less: Salaries $80,000 Depreciation ($80,000 cost X 14.29%) 11,432 Taxable income before dividends received deduction Less: Dividends received deduction (70% X $50,000) Taxable income $300,000 50,000 $350,000 (91,432) $258,568 (35,000) $223,568

4-8 E & P:

2003 Annual Edition/Solutions Manual

Taxable income Add: Tax-exempt income $25,000 Excess of MACRS depreciation over straight-line: Straight-line is $4,000 [($80,000 cost 10) 2]. MACRS depreciation of $11,432 less $4,000 straight-line 7,432 Dividends received deduction 35,000 Deduct: STCL on sale of stock Estimated Federal income tax E&P pp. 4-3 to 4-13 42. $20,000 15,400

$223,568

67,432 $291,000 (35,400) $255,600

The shareholder has a return of capital of $40,000. The $40,000 reduces the basis in the Bunting Corporation stock; any excess over basis is capital gain. There is no taxable dividend because the accumulated E & P account is brought up to date on the date of the sale. On the date of the sale, E & P is a negative $10,000 [$175,000 (beginning balance in accumulated E & P) - $175,000 (existing deficit in current E & P from sale of the asset) $10,000 (one-half of $20,000 negative E & P not related to asset sale)]; thus, the $40,000 distribution constitutes a return of capital. Generally, deficits are allocated pro rata throughout the year unless the parties can prove otherwise. Here the shareholder can prove otherwise. (If the $195,000 deficit in E & P were prorated throughout the year, there would have been a taxable dividend of $40,000 because E & P would have a positive balance of $77,500 [$175,000 (beginning balance in accumulated E & P) - $97,500 (onehalf the $195,000 deficit for the year)]. Examples 11 and 25 The shareholder has a taxable dividend of $20,000 and a return of capital of $30,000. Teal Corporation has no accumulated E & P at the time of the distribution. The shareholder is taxed on the current E & P of Teal, which was only $20,000. The balance of the distribution, $30,000, first reduces the adjusted basis of the stock in Teal Corporation. To the extent that the $30,000 exceeds the basis in the stock, a capital gain results. pp. 4-6 to 4-10 Indigo Corporation and Lucy each have a taxable dividend of $70,000. Tanager Corporations current E & P is $180,000; thus, the entire distribution is a taxable dividend even though Tanager has no accumulated E & P. Indigo Corporation is entitled to a dividends received deduction of $56,000 (80% X $70,000) because it owns more than 20% of the stock in Tanager Corporation. Thus, Indigo is only taxed on $14,000. Because Lucy is an individual, she pays tax on the entire dividend. To determine Tanager Corporations accumulated E & P at the end of the year, its current E & P ($180,000) is first reduced by the amount of the distributions ($140,000). The remaining $40,000 is then netted against the accumulated E & P deficit of $250,000, leaving a deficit of $210,000 as of January 1 of the following year. pp. 4-6 to 4-10

43.

44.

Corporations: Earnings and Profits and Dividend Distributions 45.

4-9

Wren Corporation is deemed to have made a dividend to James in the amount of the imputed interest on the loan, determined by using the Federal rate and compounded semiannually. Thus, Wren Corporation is deemed to have made a dividend to James in the amount of $20,500. Although James has dividend income of $20,500, he may be permitted to offset the income with a $20,500 deemed interest payment to Wren. Wren has deemed interest income of $20,500, but has no corresponding deduction. The deemed payment from Wren to James is a nondeductible dividend. Example 21 Immediately after the distribution, Stan has $60,000 worth of Robin stock ($50,000 in common stock and $10,000 in preferred stock). Consequently, the basis of the common stock will equal the ratio of the common stocks fair market value to the total fair market value times the stock basis, or $50,000/$60,000 X $30,000, or $25,000. Similarly, the basis of the preferred stock will equal $5,000 ($10,000/$60,000 X $30,000). Example 23 Hoffman, Raabe, Smith, and Maloney, CPAs 5191 Natorp Boulevard Mason, OH 45040 February 20, 2002 Sarah Beckert 1822 N. Sarnoff Rd. Tucson, AZ 85710 Dear Ms. Beckert: This letter is in response to your question with respect to your sale of the Grebe Corporation stock you received as a nontaxable stock dividend. Our conclusion is based upon the facts as outlined in your February 10 letter. Any change in facts may cause our conclusion to be inaccurate. You paid $10,000 for 3,000 shares of stock in Grebe Corporation two years ago. Last year, a nontaxable stock dividend of 1,000 additional shares in Grebe Corporation was received. The 1,000 shares were sold in the current year for $8,000. Your gain on the sale of the 1,000 shares is determined by subtracting your basis in the shares sold from the sales price. The tax basis in the 1,000 shares is determined by dividing the $10,000 cost of the original 3,000 shares by 4,000 (to include the 1,000 new shares). Your basis then would be $2.50 per share ($10,000 4,000). Your gain of $5,500 would then be computed as follows: [$8,000 (selling price) - $2,500 (tax basis in the 1,000 new shares)]. The $5,500 gain on the sale is a long-term capital gain. The gain is long term because you have held your original Grebe stock for more than one year. Should you need more information or need to clarify our conclusion, do not hesitate to contact me. Sincerely yours, Jon S. Davis, CPA Partner

46.

47.

4-10

2003 Annual Edition/Solutions Manual TAX FILE MEMORANDUM February 15, 2002 FROM: SUBJECT: Jon S. Davis Sarah Beckert

Today I conferred with Sarah Beckert regarding her letter to me dated February 10. Two years ago, Ms. Beckert purchased 3,000 shares of Grebe Corporation for $10,000. Last year, she received a nontaxable stock dividend of 1,000 additional shares in Grebe. She sold the 1,000 shares this year for $8,000. She asked me to determine the tax consequences of the stock sale. At issue: How is the gain on the sale of shares of stock received as nontaxable stock dividends determined and how is it taxed? Conclusion: The shareholder's basis in the original 3,000 shares, $10,000, is reallocated to the 4,000 shares she held after receiving the nontaxable stock dividend. Her basis per share after the stock dividend is $2.50 per share ($10,000 4,000 shares). Her gain on the sale of the 1,000 shares is therefore $5,500 [$8,000 (selling price) - $2,500 (basis in 1,000 shares)]. The gain is a long-term capital gain because the holding period of the original shares tacks on to the shares received as a nontaxable stock dividend. pp. 4-17 and 4-18 48. Because the fair market value of the rights is 15% or more of the value of the old stock, Cindy must allocate her basis in the stock between the stock and the stock rights. Cindy allocates basis as follows: Fair market value of stock: 200 shares X $100 = Fair market value of rights: 100 rights X $45 = $20,000 4,500 $24,500

Basis of stock: $6,000 X $20,000/$24,500 = $4,898 Basis of rights: $6,000 X $4,500/$24,500 = $1,102 Basis per right: $1,120 100 rights = $11.02 There is a capital gain on the sale of the rights of $1,319.40, computed as follows: Selling price of 30 rights Less: Basis of 30 rights (30 X $11.02) Long-term capital gain Basis of the new stock is $4,271.40, computed as follows: 70 rights X $11.02 Additional consideration ($50 X 70 shares) Basis of newly-acquired stock $ 771.40 3,500.00 $4,271.40 $1,650.00 (330.60) $1,319.40

Holding period of the 70 new shares begins on the date of purchase.

Corporations: Earnings and Profits and Dividend Distributions Example 24 49.

4-11

Partridge should recognize the loss as soon as possible and immediately thereafter make the cash distribution. For example, assume these two steps took place on January 2. Because current E & P would be a deficit, accumulated E & P would be brought up to date. At the time of the distribution, the combined E & P balance would be zero [$300,000 (beginning balance in E & P) - $300,000 (existing deficit in current E & P)], and the entire $180,000 would be a return of capital. Current deficits are allocated pro rata throughout the year unless the parties can prove otherwise. Here they can. Example 25 Hoffman, Raabe, Smith, and Maloney, CPAs 5191 Natorp Boulevard Mason, OH 45040 April 15, 2002 Diver Corporation 1010 Oak Street Oldtown, MD 20742 Dear President of Diver Corporation: This letter is in response to your question concerning the tax consequences on the planned distribution of $400,000 to your shareholders over the next four yours. Our conclusion is based upon the facts as outlined in your April 1 letter. Any change in facts may cause our conclusion to be inaccurate. Diver Corporation has a deficit in accumulated E & P of $200,000 as of January 1, 2002. Starting this year, Diver Corporation expects to generate annual E & P of $100,000 for the next four years and would like to distribute this amount to its shareholders. The corporations objective is to distribute the $400,000 over the next four years in a manner that would provide the least amount of dividend income to its shareholders. Diver Corporation should not make a distribution in 2002. It should then distribute $200,000 on December 31, 2003. It should again make no distribution in 2004. Then it should distribute the remaining $200,000 on December 31, 2005. By distributing $200,000 every other year, only half of the distribution, or $200,000, is taxed to your shareholders as dividend income. This is because E & P for 2002 of $100,000 is netted with the deficit in E & P of $200,000. At the end of 2002, there will be a deficit in E & P of $100,000. When a distribution of $200,000 is made in 2003, only $100,000 of that amount is taxed as the amount of dividend income is limited to the current E & P of $100,000. This is again the case in 2004 and 2005. On the other hand, if $100,000 is distributed each year, your shareholders are taxed on the entire distribution because the corporation will generate that amount of current E & P. The deficit in E & P does not cause part of the distribution to be nontaxable. Should you need additional information or need to clarify our conclusion, do not hesitate to call on me.

50.

4-12 Sincerely yours, Jon S. Davis, CPA Partner

2003 Annual Edition/Solutions Manual

TAX FILE MEMORANDUM April 13, 2002 FROM: SUBJECT: Jon S. Davis Diver Corporation

Today I talked to the president of Diver Corporation with respect to the April 1, 2002, letter. Diver Corporation has a deficit in its accumulated E & P of $200,000 as of January 1, 2002. Starting in 2002, Diver Corporation expects to generate annual E & P of $100,000 for the next four years and would like to distribute this amount to its shareholders. Diver Corporation wants to know how it should distribute the $100,000 over a four year period (for a total distribution of $400,000) to provide the least amount of dividend income to its shareholders (all individuals). At issue: When a corporation has a deficit in accumulated E & P, is it possible to structure a corporate distribution so that a part of the distribution will not constitute dividend income even though current E & P is sufficient to cover the distribution? Conclusion: Yes. If Diver Corporation distributes $100,000 annually to its shareholders, the entire distribution constitutes dividend income because current E & P is sufficient to cover the entire distribution. Thus, Divers shareholders have total dividend income of $400,000 over the four year period. However, if Diver Corporation does not make a distribution in 2002 or in 2004, only half of the $400,000 total distribution, or $200,000, constitutes dividend income. This is the case because in 2002 the $100,000 current E & P is netted with the $200,000 deficit in E & P to reduce the deficit in accumulated E & P to $100,000 as of December 31, 2002. In 2003, when Diver Corporation distributes $200,000 to its shareholders, only $100,000 of the distribution is dividend income. This is so because there is a $100,000 deficit in accumulated E & P, but the distribution is taxed to the extent of current E & P. As current E & P is only $100,000, only this amount is dividend income. The remaining $100,000 is a return of capital to the shareholders. After the distribution in 2003, accumulated E & P will remain a deficit of $100,000 since the distribution cannot increase a deficit in E & P. In 2004, Diver Corporation would not make a distribution. Thus, at the end of 2004, accumulated E & P is zero (the $100,000 deficit would be netted with the $100,000 current E & P for 2004). In 2005, Diver Corporation would have current E & P of $100,000. It would then make a distribution of $200,000 to its shareholders, but only $100,000 of the distribution will represent dividend income. The remaining $100,000 will again be a return of capital. Example 26 The answers to the Research Problems are incorporated into the 2003 Annual Edition of the Instructor's Guide with Lecture Notes to Accompany WEST FEDERAL TAXATION: CORPORATIONS, PARTNERSHIPS, ESTATES, AND TRUSTS.