HIJ Corporation Had a Balance of $100,000 in Accumulated Earnings

question 2

Multiple Choice

HIJ Corporation had a balance of $100,000 in accumulated earnings and profits at the beginning of the year.During the current year it had a deficit in current earnings and profits of $73,000, which was attributable to poor performance throughout the year.The corporation made two distributions during the year: $60,000 on February 1 and $40,000 on December 1.The distributions will be treated as follows:

• A)A maximum of $27,000 of the distributions will be treated as a dividend.
• B)A portion of both the first and second distribution will be treated as a dividend.
• C)Only the first distribution will give rise to dividend income.
• D)Neither of the distributions will give rise to dividend income, since there are no current earnings and profits.
• E)None of the above is true.

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Definitions:

Genetic Disorders

Diseases or conditions caused by abnormalities in an individual's DNA, which can be inherited or result from mutations.

Transgenic Animals

Animals that have had foreign genes deliberately inserted into their genome.

Protoplast Cells

Plant, bacterial, or fungal cells with the cell wall removed, which can be used in various biological studies including the uptake of DNA during genetic engineering techniques.

Ex Vivo Gene Therapy

A form of gene therapy where cells are modified outside the body and then re-introduced into the patient.