Which of the Following Statements Regarding Constructive Dividends Is Not

question 46

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 these.

---

Definitions:

True-RMS

A measurement of AC voltage or current that accurately reflects the root-mean-square value, providing a true representation of power in a circuit, regardless of waveform shape.

Harmonic Distortion

A deviation from the ideal wave form in signals, generally due to the presence of frequencies that are multiples of the original signal's frequency.

Phase Currents

The electric current flowing through one phase of a multi-phase system.

Neutral Conductor

The conductor in an electrical system that is grounded and carries current only under fault conditions, providing a path for current to return to its source in a balanced system.