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Oreo Corporation has accumulated E&P of $8,000 at the beginning of the current year. During the year (a nonleap year), the corporation incurs a current E&P deficit of$18,250. The corporation distributes $11,000 on March 20th to Morris, its sole shareholder, who has a $9,000 basis for his stock. If the exact loss cannot be determined as of the date of distribution, the treatment of the distribution will beA.$11,000 return of capital.B.$4,100 dividend and a $6,900 capital gain.C.$8,000 dividend and a $3,000 return of capital.D.$4,100 dividend and a $6,900 tax free return of capita

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Answer:

D. $4,100 dividend and a $6,900 tax free return of capital

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