Distributions: Operating Rules. Indicate whether the following statements are true or false. If the statement is false, explain why.

a. Since most corporations make distributions only when they are profitable and then only to the extent of their current earnings, there generally is no need to compute accumulated E&P.

b. A distribution made during a year when the corporation has neither accumulat-ed E&P nor current E&P cannot be a dividend.

c. Assuming R Corporation has $50,000 of accumulated E&P at the beginning of its second year of operations, a distribution of $10,000 will have the same effect to the shareholder whether it is made in the first year or second year of operations.

d. A corporation with a deficit in accumulated E&P that substantially exceeds current E&P cannot make a dividend distribution.

e. If a corporation makes four equal distributions, each of which exceeds current E&P of $10,000 and accumulated E&P of $0, the amount of the first distribu-tion that constitutes a dividend will exceed the amount of the last distribution that constitutes a dividend. Assume all distributions are made during one tax-able year.

f. If a corporation makes four equal distributions, each of which exceeds cur-rent E&P of $10,000 and accumulated E&P of $5,000, the amount of the first distribution that constitutes a dividend will exceed the amount of the last dis-tribution that constitutes a dividend. Assume all distributions are made during one taxable year.