Gander, a calendar year corporation, has a deficit in current E & P of $100,000 and a $290,000 positive balance in accumulated E & P. If Gander determines that a $500,000 distribution to its shareholders is appropriate at some point during the year, what is the maximum amount of the distribution that could potentially be treated as a dividend?
A)$0.
B)$190,000.
C)$240,000.
D)$290,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The maximum amount of the distribution that could be treated as a dividend is the sum of the current E&P (which is a deficit of $100,000) and the accumulated E&P ($290,000). Therefore, the maximum dividend is $290,000.

Gander, a Calendar Year Corporation, Has a Deficit in Current