Which of the Following Statements Best Describes the Priority of the Tax

question 43

Multiple Choice

Which of the following statements best describes the priority of the tax treatment of a distribution from a corporation to a shareholder?

• A)The distribution is a dividend to the extent of the corporation's earnings and profits, then a return of capital, and finally gain from sale of stock.
• B)The distribution is a return of capital, then a dividend to the extent of the corporation's earnings and profits, and finally gain from sale of stock.
• C)The distribution is a return of capital, then gain from sale of stock, and finally a dividend to the extent of the corporation's earnings and profits.
• D)The shareholder can elect to treat the distribution as either a dividend to the extent of the corporation's earnings and profits or a return of capital, followed by gain from sale of stock.

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Definitions:

Organic Product

Any compound containing carbon atoms that is produced from organic reactions involving organic compounds.

Organic Product

A molecule or compound that has been synthesized through a reaction involving organic (carbon-based) precursors.

Cyclobutanone

A cyclic ketone compound consisting of a four-carbon ring structure with a ketone functional group.

Single Reagent

A specific chemical substance used alone in a reaction to achieve a particular synthesis or transformation.