Beaver Company reports current E&P of $100,000 in year 1 and accumulated E&P at the beginning of the year of $200,000.Beaver distributed $400,000 to its sole shareholder on January 1, year 1.The shareholder's tax basis in her stock in Beaver is $200,000.How is the distribution treated by the shareholder in year 1?
A)$400,000 dividend.
B)$100,000 dividend, $200,000 nontaxable return of basis, and $100,000 capital gain.
C)$200,000 dividend and $200,000 nontaxable return of basis.
D)$300,000 dividend and $100,000 nontaxable return of basis.

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The Answer of Beaver Company reports current E&P of $100,000 in year 1 and accumulated E&P at the beginning of the year of $200,000.Beaver distributed $400,000 to its sole shareholder on January 1, year 1.The shareholder's tax basis in her stock in Beaver is $200,000.How is the distribution treated by the shareholder in year 1?
A)$400,000 dividend.
B)$100,000 dividend, $200,000 nontaxable return of basis, and $100,000 capital gain.
C)$200,000 dividend and $200,000 nontaxable return of basis.
D)$300,000 dividend and $100,000 nontaxable return of basis.

Beaver Company Reports Current E&P of $100,000 in Year 1