1- As long as the corporation has current E&P, a distribution may be treated as having come from current E&P, even if the corporation has a deficit balance in its accumulated E&P.

True

False

2- Losses resulting from a sale between related parties are disallowed for tax purposes, but nonetheless affect a corporation's ability to pay dividends, and accordingly reduce the corporation's E&P.

True

False

3-Interest from state and local government bonds is exempt from federal income tax; however, the interest is included in the calculation of E&P.

True

False

4- When the partnership and its partners do not use the same tax year, the tax laws require that each partner's allocable share of partnership items be reported in that partner's tax year that includes the year-end of the partnership.

True

False