Which of the following statements is correct?

Question

Quizplus · Accepted Answer

A distribution from earnings and profits is defined as a dividend under tax law. Options A, B, and D are incorrect as they do not accurately reflect tax law. A distribution of appreciated property may result in a gain to the recipient, but gains and distributions are different concepts. Earnings and profits are not the same as retained earnings, as retained earnings do not take into account certain adjustments required under tax law. Finally, distributions paid in excess of earnings and profits are generally treated as a return of capital up to the stockholder's basis, but any amounts exceeding the basis are taxed as capital gains.

Which of the Following Statements Is Correct