Identify Which of the Following Statements Is True

question 48

Multiple Choice

Identify which of the following statements is true.

• A)If both the current and accumulated E&P have deficit balances, a corporate distribution cannot be characterized as a dividend.
• B)The shareholder's basis in property received in a nonliquidating distribution is the property's FMV reduced by liabilities assumed by the shareholder.
• C)A corporation recognizes gain when distributing money as a dividend to its shareholders.
• D)All of the above are false.

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Definitions:

Dividend Payout Ratio

A financial metric that shows the proportion of earnings a company pays to its shareholders in the form of dividends, expressed as a percentage of net income.

Sustainable Growth Rate

The highest rate at which a company can grow its earnings without needing to increase its financial leverage.

Financial Planning

The ongoing process of managing one's finances to meet personal goals and prepare for the future, involving savings, investments, and budgeting.

Iterative Process

An iterative process is a procedure or method that is repeated over and over again to gradually approximate a desired result or to refine a system.