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

question 5

Multiple Choice

A calendar-year corporation has positive current E&P of $500 and accumulated negative E&P of $1,200. The corporation makes a $400 distribution to its sole shareholder. Which of the following statements is true?

• A) The distribution will not be a dividend because total earnings and profits is a negative $700.
• B) The distribution may be a dividend, depending on whether total earnings and profits at the date of the distribution is positive.
• C) The distribution will be a dividend because current earnings and profits are positive and exceed the distribution.
• D) A distribution from a corporation to a shareholder is always a dividend, regardless of the balance in earnings and profits.

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Definitions:

Eastern Europe

A region of Europe that includes countries like Poland, Hungary, and Romania, known for its diverse cultures and historical significance.

Sundiata

A legendary prince and the founder of the Mali Empire in West Africa, celebrated as a hero in the epic "Sundiata Keita".

Kingdom of Mali

A powerful and wealthy West African empire during the 13th to 16th centuries, renowned for its cultural achievements and its significant role in the trans-Saharan trade.

Legendary Ruler

A monarch or leader whose life and deeds have become part of legend, often blending historical facts with mythological elements.