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

question 50

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 are 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:

U.S. Bureau of the Census

A principal agency of the U.S. Federal Statistical System responsible for producing data about the American people and economy.

Family Size

The number of individuals in a household related by blood, marriage, or adoption.

Poverty Line

The minimum level of income deemed necessary to achieve an adequate standard of living in a given country, helping to identify individuals and households in need.

Poverty Thresholds

The minimum income levels set by a government that determine who is considered to be living in poverty.