Regardless of any deficit in accumulated E & P,distributions during the year are treated as dividends to the extent of current E & P.

Question

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Under the tax law, distributions made by a corporation are treated as dividends to the extent of current E&P, regardless of any deficit in accumulated E&P. This means that even if a corporation has a negative balance in its accumulated E&P account, it may still make distributions to its shareholders that will be treated as dividends for tax purposes as long as it has positive current E&P.

Regardless of Any Deficit in Accumulated E & P,distributions During