Exit Corporation Has Accumulated E&P of $24,000 at the Beginning

question 27

Multiple Choice

Exit Corporation has accumulated E&P of $24,000 at the beginning of the current tax year.Current E&P is $20,000.During the year,the corporation makes the following distributions to its sole shareholder who has a $22,000 basis for her stock. The treatment of the $15,000 August 1 distribution would be

• A)$15,000 is taxable as a dividend; $5,000 from current E&P and the balance from accumulated E&P.
• B)$15,000 is taxable as a dividend from accumulated E&P.
• C)$4,000 is taxable as a dividend from accumulated E&P,and $11,000 is tax-free as a return of capital.
• D)$5,000 is taxable as a dividend from current E&P,and $10,000 is tax-free as a return of capital.

---

Definitions:

Etiology Model

A theoretical framework used to understand the causes or origins of diseases and conditions, incorporating genetic, environmental, and psychological factors.

Personal Choice

The decision-making process that is guided by one's own values, preferences, and beliefs in various aspects of life.

Addictive Behaviors

Actions that are compulsive, harmful, and difficult to stop, often associated with substance use or gambling disorders.

Cognitive-Behavioral Models

Psychological frameworks focusing on understanding and changing maladaptive cognitions and behaviors to treat disorders.