A Calendar-Year Corporation Has a $75,000 Current E&P Amount,and a $25,000

question 116

Multiple Choice

A calendar-year corporation has a $75,000 current E&P amount,and a $25,000 positive accumulated E&P balance at the beginning of the year.Shareholders of the corporation have a total basis in outstanding shares of $40,000.The corporation pays a $120,000 distribution to the shareholders.The tax results to the shareholders will be

• A)dividend income of $100,000 and capital gain of $20,000.
• B)dividend income of $60,000 and capital gain of $60,000.
• C)dividend income of $100,000 and no other consequences.
• D)dividend income of $100,000 and a tax-free return of capital of $20,000.

---

Definitions:

Case Studies

Case studies are detailed examinations of a single subject or situation to explore its dynamics and draw conclusions applicable to similar contexts.

Experiments

A method of scientific investigation involving manipulation of variables to test a hypothesis and observe effects on a controlled environment or group.

Control Group

In an experiment, a comparison group of participants that does not receive the experimental treatment.

Variable Group

A set of elements or entities that are subject to change and can be measured and analyzed within a study.