Swan,a calendar year corporation,has a deficit in current E & P of $200,000 and a $580,000 positive balance in accumulated E & P.If Swan determines that a $1 million 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)$380,000.
C)$480,000.
D)$580,000.
E)None of the above.

Question

Quizplus · Accepted Answer

The maximum amount treated as a dividend is the sum of current and accumulated E&P. Since the current E&P is a deficit, only the accumulated E&P of $580,000 can be treated as a dividend.

Swan,a Calendar Year Corporation,has a Deficit in Current E