75 of 75. Sunday, Inc. was organized as a C corporation on January 1, 2021. During its first year in business, the company earned enough profits to pay dividends to its shareholders. Choose the response that correctly describes the tax consequences of this distribution. Sunday, Inc. will: Increase their earnings and profits by the amount distributed. Pay a flat tax rate of 21% on the amount distributed. Becognize a capital gain on the distribution. Reduce its taxable income by the amount distributed. Mark for follow up < < Back Save / Return Later Summary