Aztec Company reports current E&P of $200,000 in 20X3 anda deficit of ($100,000)in accumulated E&P at the beginning of the year. Aztec distributed $300,000 to its sole shareholder on January 1, 20X3. How much of the distribution is treated as a dividend in 20X3?
A)$300,000
B)$200,000
C)$100,000
D)$0

Question

Quizplus · Accepted Answer

The distribution is treated as a dividend to the extent of current E&P, which is $200,000 for 20X3. Accumulated E&P is not considered here since it's a deficit.

Aztec Company Reports Current E&P of $200,000 in 20X3 Anda