R Received a Distribution with Respect to His Stock During

question 5

Multiple Choice

R received a distribution with respect to his stock during the past year.He should treat the amount received

• A)First as a nontaxable return of capital to the extent of his basis and then a taxable dividend distribution to the extent that any earnings and profits exist
• B)First as a taxable dividend distribution to the extent that any earnings and profits exist and then a nontaxable return of capital to the extent of his basis
• C)Fully taxable as ordinary income without regard to his basis or the corporation's earnings and profits
• D)None of the above

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Definitions:

Scanty

Insufficient in amount, quantity, or extent; meager or limited.

Double

Consisting of two equal, identical, or similar parts or things; increased or twice as much in size, quantity, or extent.

Meso-

A prefix in biology and chemistry, meaning middle or intermediate.

Off-center

Describes something that is not positioned in the middle or is away from the central point or axis.