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:

Independent Variable

In experimental research, the variable that is manipulated or changed to observe its effect on the dependent variable.

Memorizing

The act of committing information to memory for later retrieval.

Music

An art form and cultural activity that involves the creation of sounds organized in time, often expressing emotions through rhythm, melody, and harmony.

Autonomy

The capacity to make an informed, uncoerced decision independently, often associated with freedom from external control or influence.