If the Amount of a Corporate Distribution Is Less Than

question 60

True/False

If the amount of a corporate distribution is less than the amount of the corporate earnings and profits, the return of capital concept does not apply and the shareholders' adjusted basis for the stock remains unchanged.

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Definitions:

Contributory Negligence

A legal doctrine that reduces the amount of damages a plaintiff can receive based on their own negligence contributing to the harm.

402A

A section of the Restatement (Second) of Torts, which sets out the principle of strict liability for harm caused by defective products.

Misuse Or Abuse

Wrong or excessive use of something that can lead to harm or damage.

Implied Warranties

Guarantees legally assumed in a transaction, suggesting that the product sold will meet certain standards of quality and reliability.