A Calendar-Year Corporation Has Negative Current E&P of $500 and Accumulated

question 80

Multiple Choice

A calendar-year corporation has negative current E&P of $500 and accumulated positive E&P of $1,000.The corporation makes a $600 distribution to its sole shareholder.Which of the following statements is true?

• A)$500 of the distribution will be a dividend because total earnings and profits is $500.
• B)$0 of the distribution will be a dividend because current earnings and profits is negative.
• C)$600 of the distribution will be a dividend because accumulated earnings and profits is $1,000.
• D)Up to $600 of the distribution could be a dividend depending on the balance in accumulated earnings and profits on the date of the distribution.

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Definitions:

Logo

A symbol or design adopted by an organization to identify its products, uniforms, vehicles, etc.

Brand Name

The unique name given to a product or service from a specific source, used to distinguish it from others in the market.

Higher-Quality Materials

Substances or components that are superior in terms of durability, texture, and overall performance in the manufacturing of products.

Trading Up

A business strategy that involves convincing customers to purchase more expensive items, upgrades, or add-ons in an effort to increase profitability.