_____ 20.A corporation must have positive earnings and profits in both its current earnings and profits account and its accumulated earnings and profits account to make a taxable dividend distribution.

Question

Quizplus · Accepted Answer

A corporation may distribute taxable dividends even if it has negative earnings and profits in its accumulated earnings and profits account. However, if it has positive earnings and profits in the current earnings and profits account but negative earnings and profits in the accumulated earnings and profits account, the distribution is treated as a return of capital and not as a dividend.

_____ 20A Corporation Must Have Positive Earnings and Profits in Both