A corporation has positive current earnings and profits $($E&P$)$ and a positive balance in accumulated E&P at the end of the tax year. A distribution in excess of current and accumulated E&P is made to a sole shareholder at the end of the tax year.

How should this shareholder treat the distribution in excess of the current and accumulated E&P$?$

As a loss

As a dividend

As a capital gain

As a return of capital

A corporation is giving its shareholders a distribution of $$10$ per share or one additional share of stock for every five shares that the shareholders currently own.

Is this a taxable distribution under current tax law, and how does this affect the ownership?

It is a taxable distribution, and the distribution amount is not based on proportional ownership interests

It is a taxable distribution and has the potential to change the ownership structure of the corporation.

It is not a taxable distribution, and the distribution amount is based on proportional ownership interests.

O It is not a taxable distribution and has the potential to change the ownership structure of the corporation.