Which of the Following Statements Is Incorrect

question 111

Multiple Choice

Which of the following statements is incorrect?

• A)A distribution from earnings and profits in excess of stockholder basis is a nontaxable return of capital.
• B)Distributions paid in excess of earnings and profits are nontaxable to the extent of stockholder basis.
• C)A distribution of appreciated property creates a gain to the corporation.
• D)Earnings and profits are conceptually similar to retained earnings.

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Definitions:

Resources

Assets, materials, or inputs used by an individual or organization to achieve objectives or produce goods and services.

Best Interest

A principle that emphasizes acting for the greatest benefit or advantage of all parties involved.

Benefit

An advantage, improvement, or gain that is obtained from an action, decision, or situation.

Statement Of Action

A document or declaration outlining specific steps or measures that need to be taken in order to achieve a certain goal or objective.