A Calendar-Year Corporation Has Positive Current E&P of $500 and a Deficit

question 32

Multiple Choice

A calendar-year corporation has positive current E&P of $500 and a deficit in accumulated E&P of ($1,200) . The corporation makes a $400 distribution to its sole shareholder. Which of the following statements is true?

• A) The distribution will not be a dividend because total E&P is a deficit.
• B) The distribution may be a dividend, depending on whether total E&P at the date of the distribution is positive.
• C) The distribution will be a dividend because current E&P is positive and exceeds the distribution.
• D) A distribution from a corporation to a shareholder is always a dividend, regardless of the balance in E&P.

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Definitions:

Contraception Responsibility

The accountability shared between partners to effectively prevent pregnancy and protect against sexually transmitted infections.

Contraception Responsibility

The duty of individuals or couples to manage and employ methods to prevent pregnancy effectively.

Reversible Contraception

Birth control methods that can be discontinued to restore fertility, such as pills, intrauterine devices, and condoms.

Abstinence

The practice of refraining from indulging in certain activities, most commonly referring to abstaining from sexual activity or substance use.