1. Stock dividends are always tax-free to the recipient.

   		a. true.
   		b. false.

2. Mike owned 100 shares of the HHH Corporation. Mikes total basis in his 100 shares was $100 ($1 per share basis). Then HHH redeemed 60 of Mikes shares. Mike received sale treatment on the redemption. After the redemption, Mikes total basis in his remaining 40 shares is:

		a. $100.
		b. $40.
		c. $60.
		d. None of the above.

3. A company will recognize both gain and loss on a nonliqudating distribution of property.

		a. true.
		b. false.

4. Corporate distributions that exceed earnings and profits are always taxable capital gains.

		a. true.
		b. false.

5. The ABC Company reported taxable income of $500,000 in 2020. The company paid $105,000 in federal taxes for 2020. If you start with taxable income of $500,000 what adjustment will be necessary for the $105,000 for purposes of calculating E&P?

		a. a $105,000 addition.
		b. a $105,000 deduction.
		c. no adjustment.
		d. none of the above.