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

question 27

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

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Definitions:

Human Resources

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Advances in Technology

Progressive developments and improvements in technology that enhance efficiency, productivity, and capability in various fields.

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Employee Shortages

A situation where there are not enough employees to fill the available job positions within an organization or market.