Distributions of cash and other assets to shareholders by U.S.corporations in excess of their current and accumulated earnings and profits qualify as dividends, provided the shareholder's basis in the stock has been reduced to zero.

Question

Quizplus · Accepted Answer

Distributions in excess of a corporation's current and accumulated earnings and profits are generally not treated as dividends. Instead, they are treated as a return of capital to the extent of the shareholder's basis in the stock and then as capital gain if the distribution exceeds the shareholder's basis.

Distributions of Cash and Other Assets to Shareholders by U