Identify which of the following statements is true.

A. A corporation recognizes gain when distributing money as a dividend to its shareholders.

B. If both the current and accumulated E&P have deficit balances, a corporate distribution cannot be characterized as a dividend.

C. The shareholder's basis in property received in a nonliquidating distribution is the property's FMV reduced by liabilities assumed by the shareholder.

D. All of the above are false.

Question

Business

Simon Hinton

4 March, 09:04

Identify which of the following statements is true.

A. A corporation recognizes gain when distributing money as a dividend to its shareholders.

B. If both the current and accumulated E&P have deficit balances, a corporate distribution cannot be characterized as a dividend.

C. The shareholder's basis in property received in a nonliquidating distribution is the property's FMV reduced by liabilities assumed by the shareholder.

D. All of the above are false.

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Answers (1)

Know the Answer?

Madalyn Solomon · Answer 1

B. If both the current and accumulated E&P have deficit balances, a corporate distribution cannot be characterized as a dividend.

Explanation:

The statement written in the option B is correct. If both accumulated and current E&P have low balances, then we cannot corporate distribution as dividend rest of the options are false. Hence the answer is option B.