Husker Corporation Reports Current E&P of Negative $200,000 in 20X3

question 98

Multiple Choice

Husker Corporation reports current E&P of negative $200,000 in 20X3 and accumulated E&P at the beginning of the year of $300,000. Husker distributed $200,000 to its sole shareholder on December 31, 20X3. The shareholder's tax basis in her stock in Husker is $50,000. How is the distribution treated by the shareholder in 20X3?

• A) $200,000 dividend.
• B) $100,000 dividend, $50,000 tax-free return of basis, and $50,000 capital gain.
• C) $100,000 dividend and $100,000 tax-free return of basis.
• D) $0 dividend, $50,000 tax-free return of basis, and $150,000 capital gain.

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Definitions:

Psychological Dependence

A condition characterized by a perceived need to continue using a substance due to emotional or psychological reliance, despite potential harm.

Medications

substances used in the treatment, diagnosis, or prevention of diseases and for relieving pain or affecting the structure of any part of the body.

Attention Narrowing

The phenomenon where focus is restricted to a limited range of stimuli or tasks, ignoring peripheral information.

Stimulants

Drugs that have activating or excitatory effects on brain or bodily functions.