A Distribution from a Corporation Will Be Taxable to the Recipient

question 56

True/False

A distribution from a corporation will be taxable to the recipient shareholders only to the extent of the corporation's
E & P.

---

Definitions:

Interest Portion

The part of a payment that covers the interest or cost of borrowing, as distinguished from principal or repayment of the borrowed amount.

Principal Reduction

The act of paying down the outstanding balance of a loan, not including interest, to reduce the principal amount owed.

Interest Payment

The amount paid by a borrower to a lender for the use of borrowed money, usually expressed as a percentage of the principal.

Note Payable

A liability representing a written promise to pay a specified amount of money at a future date, often including interest payments.