Wildcat Corporation reports current E&P of negative $200,000 in 20X3 and accumulated E&P at the beginning of the year of $100,000. Wildcat distributed $300,000 to its sole shareholder on December 31, 20X3. How much of the distribution is treated as a dividend in 20X3?

Question

Quizplus · Accepted Answer

If accumulated E&P is positive, but current E&P is negative, then a distribution is a dividend to the extent of net E&P (accumulated E&P less an allocated portion of the deficit in current E&P) on the date of the distribution.

Wildcat Corporation Reports Current E&P of Negative $200,000 in 20X3