Smith Enterprises, Inc., is a small manufacturer of ski equipment with paid-in capital of $4,000,000. It reports on the acanaI basis and uses a fiscal year ending April 30. On May 1, 20m Smith's records showed an accumulated eamings and profits of $250,000. By September 1, 20m, in anticipation of an average season, Smith's management had forecasted a $1,000,000 profit for the fiscal year ending April 30, 20X2. Based on this projection, the Board of Directors voted to pay a $200,000 cash dividend to its approximately 100 stockholders of record on October 15, 20x1. None of the stockholders owns over 4% of the corporation's stock. The dividend was thereafter paid on October 31, 20x1. The rosy predictions turned into gloom, however, when the ski resorts were hit by their worst snow season on record. Most ski resorts did not open until after Christmas and then only to mediocre snow depths. Much of the ski equipment sold on consignment was returned to the factory. Flather than reporting positive current earnings and profits, Smith's operations for 2cx1-2oxz year produced a final net operating loss of $500,000. The controller's office is beginning work on the program required to run Form 1099 for stockholders of record on October 15, 2mm. They have sought your aid to help them make the appropriate determination as to how to characterize the October 31, 20X1, payment they made. Please advise