If a company has negative accumulated E&P it would still be possible for a distribution to be considered a dividend in the current year.

True / False

Bobby's Book Co has a net operating loss of $8,000 in 2015, which is their initial year of operation. They had tax exempt income for the same year of $13,000 and $1,000 of nondeductible capital losses. In 2015 they distributed $6,000 to their shareholders. How much of this distribution would be considered a dividend and how much would be return of capital?

$0 dividend, $6000 ROC

$5,000 dividend and $1,000 ROC

$6,000 dividend and $0 ROC

$4,000 dividend and $2,000 ROC

$1,000 dividend and $5,000 ROC

$2,000 dividend and $4,000 ROC

A partnership is a taxpaying entity and partners are taxed on their distributions from a partnership.

True / False