Husker Corporation Reports Current E&P of Negative $200,000 in Year

question 61

Multiple Choice

Husker Corporation reports current E&P of negative $200,000 in year 1 and accumulated E&P at the beginning of the year of $300,000.Husker distributed $200,000 to its sole shareholder on December 31, year 1.The shareholder's tax basis in her stock in Husker is $50,000.How is the distribution treated by the shareholder in year 1?

• A)$200,000 dividend.
• B)$100,000 dividend, $50,000 nontaxable return of basis, and $50,000 capital gain.
• C)$100,000 dividend and $100,000 nontaxable return of basis.
• D)$0 dividend, $50,000 nontaxable return of basis, and $150,000 capital gain.

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Definitions:

Apical

Pertaining to the tip or summit of a structure, such as the apex of the heart.

Vital Signs

The critical measurement of the body's most basic functions, including temperature, pulse, respiration rate, and blood pressure.

Blood Pressure

The force exerted by circulating blood on the walls of blood vessels, measured to assess cardiovascular health.

Respiratory Rate

The number of breaths taken per minute, an important vital sign that helps assess breathing function and overall health status.