A Calendar-Year Corporation Has Negative Current E&P of $500 and Accumulated

question 50

Multiple Choice

A calendar-year corporation has negative current E&P of $500 and accumulated positive E&P of $1,000. The corporation makes a $600 distribution to its sole shareholder. Which of the following statements is true?

• A) $500 of the distribution will be a dividend because total earnings and profits is $500.
• B) $0 of the distribution will be a dividend because current earnings and profits are negative.
• C) $600 of the distribution will be a dividend because accumulated earnings and profits is $1,000.
• D) Up to $600 of the distribution could be a dividend depending on the balance in accumulated earnings and profits on the date of the distribution.

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Definitions:

Opium Of The People

A term used by Karl Marx, metaphorically describing religion's effect on people as a soothing but illusionary escape from their distress.

Marx

A reference to Karl Marx, a 19th-century philosopher, economist, and revolutionary known for his critical analysis of capitalism and his influence on socialist thought.

Ecclesia

A state church or an organized religion that is closely integrated with the political and social structure of a society, often holding significant influence.

State Supported Churches

Churches that receive financial and political backing from the government.