If a C Corporation Has Earnings and Profits at Least

question 84

True/False

If a C corporation has earnings and profits at least equal to the amount of a distribution, the tax consequences to the shareholders are the same regardless of whether the distribution is classified as a dividend or as a stock redemption.

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Definitions:

Net Income

The amount of total revenues minus total expenses, representing the profit a company has generated over a specific period.

Bonus

Additional compensation given to employees or executives beyond their regular salary, often as a reward for achieving certain performance targets.

Pre-bonus Income

The total revenue or profit earned by an individual or entity before any bonuses are issued or calculated.

Partnership Income

The earnings distributed to partners of a partnership based on the terms of the partnership agreement.