Question

At the beginning of the year, Data, a C corporation, had a $45,000 deficit in accumulated earnings and profits. For the current year, Data reported earnings and profits of $15,000. Data distributed $18,000 to its shareholders during the current year. What amount of the distribution is treated as a taxable dividend

Answer 1

$15,000 is treated as a taxable dividend.

A corporation's distribution amount on its stock to it's shareholders will be the dividend distribution that is made with current earnings or profits or accumulated earnings or profits. In this question, $18,000 distribution would be a dividend to the extent of the $15,000 of the current period earnings or profits.

$45,000 deficit in its accumulated earnings and profits would begin the next year with the same amount amount because distribution does not increase a deficit.

Dividend income is taxable, but taxation varies depending on whether the dividend is eligible or ineligible. 1 Investors are usually drawn to dividend stocks and mutual funds because the return on investment (ROI) includes market appreciation in addition to dividends.

All dividends are taxable and all dividend income must be reported. This includes dividends that are reinvested to buy shares. If you received a dividend of at least $10 from a company, you should receive a Form 1099-DIV detailing the amount you received.

Learn more about taxable dividends here: brainly.com/question/27456116

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