The Little D Corporation has $150 in current earnings and profits and $100 in accumulated earnings and

Question:

The Little D Corporation has $150 in current earnings and profits and $100 in accumulated earnings and profits. It makes a $400 distribution to its sole shareholder whose stock basis is $100. What are the shareholder’s tax consequences?
a. $250 dividend
b. $250 dividend; $50 capital gain
c. $250 dividend; $100 capital gain
d. $400 dividend

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...

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