Which of the following statements regarding constructive dividends is not correct?
A) Constructive dividends do not need to be formally declared or designated as a dividend.
B) Constructive dividends need not be paid pro rata to the shareholders.
C) Corporations that receive constructive dividends may not use the dividends received deduction.
D) Constructive dividends are taxable as dividends only to the extent of earnings and profits.
E) All of the above.

Question

Quizplus · Accepted Answer

Constructive dividends are typically received by shareholders, not corporations, and thus the dividends received deduction is not applicable to corporations in this context.

Which of the Following Statements Regarding Constructive Dividends Is Not