Husker Corporation Reportsa Deficit in Current E&P of ($200,000)in 20X3

question 53

Multiple Choice

Husker Corporation reportsa deficit in current E&P of ($200,000) in 20X3 and accumulated E&P at the beginning of the year of $300,000. Husker distributed $200,000 to its sole shareholder on December 31, 20X3. The shareholder's tax basis in her stock in Husker is $50,000. How is the distribution treated by the shareholder in 20X3?

• A)$200,000 dividend
• B)$100,000 dividend, $50,000 tax-free return of basis, and $50,000 capital gain
• C)$100,000 dividend and $100,000 tax-free return of basis
• D)$0 dividend, $50,000 tax-free return of basis, and $150,000 capital gain

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Definitions:

Normative Influence

The impact of social norms and the expectations of others on an individual's behavior, encouraging conformity to group standards.

Norms

Collective expectations that members of social units have regarding the behavior of each other.

Group Structure

The arrangement and organization of individuals within a group, including roles, relationships, and hierarchies, that influence the group's function.

Cohesive

Describes a unit, group, or material that is well integrated, maintaining unity and working well together towards common goals.