Purple Corporation has accumulated E & P of $100,000 on January 1, 2012.In 2012, Purple has current E & P of $130,000 (before any distribution).On December 31, 2012, the corporation distributes $250,000 to its sole shareholder, Cindy (an individual).Purple Corporation's E & P as of January 1, 2013 is:

Question

Quizplus · Accepted Answer

The distribution exceeds the current E&P of $130,000, so the distribution is a dividend to the extent of the current E&P and a return of capital to the extent of the excess. The return of capital reduces the accumulated E&P to $0.

Purple Corporation Has Accumulated E & P of $100,000 on January