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A corporation had $10,000, of earnings and profits (E&P) for the current year and accumulated negative E&P of $100,000. It paid a cash distribution of $30,000. What amount represents the taxable dividend to the shareholder for that year?


a. $100,000


b. $30,000


c. $10,000


d.$0

Respuesta :

Answer:

c. $10,000.

Explanation:

The profit of the company is $10,000 which is taxable dividend income. The company's E&P accumulate is negative. Dividends are paid out from current or accumulated earning and profits of the company. The company had only $10,000 earnings in the current earning and profits account which will be taxable dividend income.