Question

Identify which of the following statements is true.

A. A corporation recognizes gain when distributing money as a dividend to its shareholders.
B. If both the current and accumulated​ E&P have deficit​ balances, a corporate distribution cannot be characterized as a dividend.
C. The​ shareholder's basis in property received in a nonliquidating distribution is the​ property's FMV reduced by liabilities assumed by the shareholder.
D. All of the above are false.

Answer 1

Answer:

B. If both the current and accumulated E&P have deficit balances, a corporate distribution cannot be characterized as a dividend.

Explanation:

The statement written in the option B is correct.If both accumulated and current E&P have low balances,then we cannot corporate distribution as dividend rest of the options are false.Hence the answer is option B.