A corporate distribution to a noncorporate shareholder that is a return from the shareholder's investment receives more favorable tax treatment than a distribution that is a return of the shareholder's investment.

Question

Quizplus · Accepted Answer

Distributions that are returns of the shareholder's investment are treated as a sale or exchange of the investment.Distributions that are returns from the shareholder's investment are dividend distributions.

A Corporate Distribution to a Noncorporate Shareholder That Is a Return