Which of the Following Statements Regarding Constructive Dividends Is Not

question 41

Multiple Choice

Which of the following statements regarding constructive dividends is not correct?

• A) Constructive dividends do not need to be formally declared or designated as a dividend.
• B) Constructive dividends need not be paid pro rata to the shareholders.
• C) Corporations that receive constructive dividends may not use the dividends received deduction.
• D) Constructive dividends are taxable as dividends only to the extent of earnings and profits.
• E) All of the above.

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Definitions:

Beneficial

Something that promotes or enhances well-being, providing a positive or advantageous effect.

Oral Stop Payment

A verbal request made to a financial institution asking them to prevent the payment or processing of a check or financial instrument.

Written Stop Payment

A formal written notice given to a bank instructing it not to pay out funds under a specific check or transaction.

Recourse

A right or legal means to obtain repayment, compensation, or remedy in the event of a breach of contract or agreement.