Exit Corporation Has Accumulated E&P of $24,000 at the Beginning

question 61

Multiple Choice

Exit Corporation has accumulated E&P of $24,000 at the beginning of the current tax year. Current E&P is $20,000. During the year, the corporation makes the following distributions to its sole shareholder who has a $22,000 basis for her stock. The treatment of the $15,000 August 1 distribution would be

• A)$15,000 is taxable as a dividend; $5,000 from current E&P and the balance from accumulated E&P.
• B)$15,000 is taxable as a dividend from accumulated E&P.
• C)$4,000 is taxable as a dividend from accumulated E&P, and $11,000 is tax-free as a return of capital.
• D)$5,000 is taxable as a dividend from current E&P, and $10,000 is tax-free as a return of capital.

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Definitions:

Facial Expressions

Visible changes in the face that convey emotional states or reactions, often universally recognized emotions such as happiness, anger, or surprise.

Self-Awareness Theory

The theory that aspects of the self—one’s attitudes, values, and goals—will be most likely to influence behavior when attention is focused on the self.

Negative Self-Related Discrepancy

The difference between one’s self-perception and an ideal or desired self, often leading to negative emotions or self-evaluation.

Escape Self-Awareness

A psychological state or strategy where individuals deflect attention away from themselves to avoid distressing self-reflection or evaluation.