1. Assume a calendar-year corporation has a deficit in current E&P of ($100) andpositive accumulated E&P of $100. Under this circumstance, a cash distribution of $100 to the corporation's sole shareholder on June 30 will not be treated as a dividend because total E&P at December 31 is $0. True or false? Explain.

Thriller Corporation has one type of voting common stock, of which 1,000 shares are issued and outstanding.The shares are owned as follows:

Joe Jackson - 400

Mike Jackson (Joe's son)- 200

Jane Jackson (Joe's daughter)- 200

Vinnie Price (unrelated)- 200

Total shares1,000

2.Thriller Corporation has current E&P of $400,000 for this year and accumulated E&P at January 1 of this year of $60,000. During this year, the corporation made the following distributions to its shareholders:

03/31: Distributed $100 per share to each shareholder ($100,000 in total).

06/30: Distributed $100 per share to each shareholder ($100,000 in total).

09/30: Distributed $100 per share to each shareholder ($100,000 in total).

12/31: Redeemed all of Vinnie's shares for $250,000 in cash.

a.Compute the corporation's accumulated E&P at January 1 of next year.