Which of the following statements about earnings and profits (E&P) is false ? A.

Question

Which of the following statements about earnings and profits (E&P) is false?

A. A corporation can make taxable dividend distributions if it has current E&P, notwithstanding the fact that it may have a deficit in accumulated E&P. B. A dividend is defined as paid out of either current or accumulated E&P. C. E&P consists of two basic parts: current E&P and accumulated E&P. D. The presumption is that every distribution is first made out of accumulated E&P and then from current E&P.

Explanation / Answer

correct option is "d"

Options Reason True/False A If current E& P is positive ,a corporation can pay taxable dividend even if it has deficit accumulated E & P. (It is ignored) True B dividend can be paid out of either current E&P or accumulated E &P to consitute a taxable dividend any excess payment will be treated as return on capital True C E&P can be current or accumulated True D Dividend is first paid out of current E& P and then excess payment up to accumulated E& P is made in chronological manner False.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.