Question

Current E&P and accumulated E&P are both positive. The order in which a distribution is deemed to come from E&P is:

Answer 1

There are specific rules set by the IRS to determine the order in which a distribution is deemed to come from E&P. The order is based on the current E&P deficit, accumulated E&P, current E&P, and distribution of earnings and profits.

Step-by-step explanation:

The order in which a distribution is deemed to come from E&P is determined by the rules set by the Internal Revenue Service (IRS). According to the IRS regulations, the order of distribution is as follows:

1. Current E&P deficit: If the current E&P is in a deficit, the distribution is deemed to come from the current E&P deficit.
2. Accumulated E&P: If the distribution exceeds the current E&P but not the accumulated E&P, it is deemed to come from the accumulated E&P.
3. Current E&P: If the distribution exceeds both the current E&P and accumulated E&P, the excess amount is deemed to come from the current E&P.
4. Distribution of earnings and profits: After exhausting the current E&P and accumulated E&P, any further distribution is deemed to come from earnings and profits in the order they were generated.

The complete question is: Current E&P and accumulated E&P are both positive. The order in which a distribution is deemed to come from E&P is: is: