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

question 95

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.

---

Definitions:

Adolescents

Individuals in the transitional stage of human development from childhood to adulthood, typically ranging from ages 13 to 19.

Co-occurring SUD

The simultaneous presence of Substance Use Disorder along with one or more mental health disorders in an individual.

Psychiatric Disorders

Mental health conditions characterized by changes in mood, thinking, or behavior, associated with distress or impaired functioning.

Pathological Gambling

A disorder characterized by persistent and recurrent problematic gambling behavior leading to clinically significant impairment or distress.