Which of the Following Statements Best Describes the Priority of the Tax

question 68

Multiple Choice

Which of the following statements best describes the priority of the tax treatment of a distribution from a corporation to a shareholder?

• A) The distribution is a return of capital, then gain from sale of stock, and finally a dividend to the extent of the corporation's earnings and profits.
• B) The distribution is a return of capital, then a dividend to the extent of the corporation's earnings and profits, and finally gain from sale of stock.
• C) The shareholder can elect to treat the distribution as either a dividend to the extent of the corporation's earnings and profits or a return of capital, followed by gain from sale of stock.
• D) The distribution is a dividend to the extent of the corporation's earnings and profits, then a return of capital, and finally gain from sale of stock.

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Definitions:

Logical

Pertaining to or characterized by clear, sound reasoning or a valid inference.

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In psychoanalytic theory, the hidden meaning or symbolism behind the manifest content of dreams or other thoughts.

Dream

While sleeping, an individual undergoes a series of mental pictures, concepts, and sensations.

Unconscious Desire

Wishes or motivations that influence an individual's actions and thoughts without their direct awareness.