Corporations subscribe to this concept of Dual taxation in which income earned by the corporation is taxed and if distributed to its shareholders, the distribution could be considered a dividend to the shareholder or a return of their original capital investment. The determination of the corporations economic ability to pay a dividend is called its Earnings & Profits E&P. Lets get a full understanding of E&P with a discussion on why E&P matters, how to calculate it, and recognize when there might be a partial dividend from a distribution.