Tangelo Corporation Has an August 31 Year-End

question 140

Multiple Choice

Tangelo Corporation has an August 31 year-end.Tangelo had $50,000 in accumulated E & P at the beginning of its 2018 fiscal year (September 1,2017) and during the year,it incurred a $75,000 operating loss.It also distributed $65,000 to its sole shareholder,Cass,on November 30,2017.If Cass is a calendar year taxpayer,how should she treat the distribution when she files her 2017 income tax return (assuming the return is filed by April 15,2018) ?

• A)$65,000 of dividend income.
• B)$60,000 of dividend income and $5,000 recovery of capital.
• C)$50,000 of dividend income and $15,000 recovery of capital.
• D)The distribution has no effect on Cass in the current year.
• E)None of the above.

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Definitions:

Subliminal Perception

The processing of information by sensory systems without a person's conscious awareness.

False Alarm

An error or false report indicating a problem or emergency when none actually exists.

Just Noticeable Difference

The smallest difference in stimulation that can reliably be detected by an organism, often referred to as the "difference threshold."

Absolute Threshold

The minimum intensity of a stimulus required to be perceivable by our senses.