Discussion Question 5-2 (L. 0.3 )
Classify the effect of a distribution in a year when the distributing corporation has the following conditions.
a. A deficit in accumulated E & P and a positive amount in current E & . R.
If a distributing corporation has a defict in accumulated E A. P. and a positive amount in current E A R, a distribution during the year is a
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to the extent of current E& & Current and accomulated E & P
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netted.
b. A positive amount in accumulated E.8. P and a deflit in current E & R
If the corporation has a positive amount in accumulated E & . P and a deficit in current E & . B. a distribution either is a
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, depending on the resulting balance in E & P when current and accumulated E & P are netted.
c. A deficit in both current and accumulated E & P.
If there is a deficit in both current and accumulated E & . P, a corporate distribution is treated as a
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to the extent of the shareholder's basis in his or her stock. Any excess is a
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-
d. A positive amount in both current and accumulated E & R
If there is a positive amount in both current and accumulated E& P, to the extent of the positive balance in both amounts, the distribution is a
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