A Calendar-Year Corporation Has Deficit in Current E&P of ($500)

question 65

Multiple Choice

A calendar-year corporation has deficit in current E&P of ($500) and accumulated positive E&P of $1,000. The corporation makes a $600 distribution to its sole shareholder. Which of the following statements is true?

• A) $500 of the distribution will be a dividend because total E&P is $500.
• B) $0 of the distribution will be a dividend because current E&P is a deficit.
• C) $600 of the distribution will be a dividend because accumulated E&P is $1,000.
• D) Up to $600 of the distribution could be a dividend depending on the balance in accumulated E&P on the date of the distribution.

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