All cash distributions received from a corporation with a positive balance in accumulated E & P at the beginning of the year will be taxed as dividend income.

Question

Quizplus · Accepted Answer

Not all cash distributions are taxed as dividend income; only the portion that comes from the corporation's current or accumulated earnings and profits (E&P) is considered a dividend. Distributions in excess of E&P may be treated as a return of capital or capital gain.

All Cash Distributions Received from a Corporation with a Positive