Prepare a memo for your firm's file

Federal Income Tax II ACCT-3020

Heron Corporation, contacted you and would like your advice on future shareholder distributions. Martin Morales (Heron's president) informs you that Heron has a deficit in accumulated E & P Of $300,000. Starting this year, it expects to generate annual E & P Of $150,000 for the next four years and would like to distribute this amount to its shareholders. How should Heron Corporation distribute the $600,000 over the four-year period to provide the least amount Of dividend income to its shareholders (all individuals)? Prepare a memo for your firm's file. Heron Corporation's address is 12 Nature Trail Way, Daytona Beach, FL 32114.