Gander, a Calendar Year Corporation, Has a Deficit in Current

question 54

Multiple Choice

Gander, a calendar year corporation, has a deficit in current E & P of $100,000 and a $290,000 positive balance in accumulated E & P. If Gander determines that a $500,000 distribution to its shareholders is appropriate at some point during the year, what is the maximum amount of the distribution that could potentially be treated as a dividend?

• A)$0.
• B)$190,000.
• C)$240,000.
• D)$290,000.
• E)None of the above.

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Definitions:

Capacity

The legal ability of a party to enter into a contract.

Severely Intoxicated

A state of being under the influence of alcohol or drugs to a significant degree, impacting cognitive and physical abilities.

Capacity

In law, the ability of an individual to enter into a contract, evidenced by their being of sound mind and of legal age, or by a business to enter into agreements.

Ratification

The act of giving formal consent to a treaty, contract, or agreement, making it officially valid.