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.

---

Definitions:

Production Blocking

A phenomenon where group processes inhibit individual members from contributing ideas or content simultaneously.

Evaluation Apprehension

Anxiety or concern felt by individuals when they believe they are being assessed by others, which can influence their performance and participation.

Groupthink

is a psychological phenomenon where the desire for harmony and conformity in a group results in an irrational or dysfunctional decision-making outcome, with members minimizing conflict and reaching a consensus without critical evaluation.

Groupthink

A psychological phenomenon in which the desire for harmony and conformity within a group results in an irrational or dysfunctional decision-making outcome.