Cash Distributions Received from a Corporation with a Deficit Balance

question 6

True/False

Cash distributions received from a corporation with a deficit balance in accumulated E & P at the beginning of the year will not be taxed as dividend income.

---

Definitions:

EBIT

A financial metric representing a company's profit before deducting expenses for interest and income taxes.

Balance Sheet

A balance sheet is a financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Uses of Cash

Refers to the various ways a company might utilize its cash on hand, including operational expenses, investments, repaying debts, and returning money to shareholders.

Accounts Receivable

Amounts yet to be paid by customers for goods or services supplied by a business.