Beaver Company Reports Current E&P of $100,000 in 20X3 and Accumulated

question 90

Multiple Choice

Beaver Company reports current E&P of $100,000 in 20X3 and accumulated E&P at the beginning of the year of $200,000. Beaver distributed $400,000 to its sole shareholder on January 1, 20X3. The shareholder's tax basis in her stock in Beaver is $200,000. How is the distribution treated by the shareholder in 20X3?

• A)$400,000 dividend
• B)$100,000 dividend, $200,000 tax-free return of basis, and $100,000 capital gain
• C)$200,000 dividend and $200,000 tax-free return of basis
• D)$300,000 dividend and $100,000 tax-free return of basis

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Definitions:

W.B. Du Bois

An influential American sociologist, historian, and civil rights activist, co-founder of the NAACP, who advocated for the rights and advancement of Black Americans.

Progressive

Refers to a range of political and social reform movements aimed at addressing issues of inequality, corruption, and inefficiency in government and society.

Red Scare

A period of intense fear or paranoia about communism and its potential spread in the United States, leading to widespread suspicion and discrimination against perceived communists.

Political Intolerance

The lack of willingness to allow or accept opposing political views, resulting in a potentially oppressive or hostile environment for differing political beliefs.