Beaver Company Reports Current E&P of $100,000 in 20X3 and Accumulated

question 90

Multiple Choice

Beaver Company reports current E&P of $100,000 in 20X3 and accumulated E&P at the beginning of the year of $200,000. Beaver distributed $400,000 to its sole shareholder on January 1, 20X3. The shareholder's tax basis in her stock in Beaver is $200,000. How is the distribution treated by the shareholder in 20X3?

• A)$400,000 dividend
• B)$100,000 dividend, $200,000 tax-free return of basis, and $100,000 capital gain
• C)$200,000 dividend and $200,000 tax-free return of basis
• D)$300,000 dividend and $100,000 tax-free return of basis

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Definitions:

Gross Requirements

The total demand for a product or component before taking into account inventory on hand or any scheduled receipts.

MRP Tables

Material Requirements Planning Tables are tools used in manufacturing to ensure that materials are available for production and products are available for delivery to customers, synchronizing supply with demand.

Bill of Material

A comprehensive list detailing the raw materials, parts, and components, including quantities, required to produce a product.

Lot-For-Lot

An inventory replenishment strategy where the order quantity matches exactly the demand for the next period, aiming to minimize holding costs.