Distributions from corporations to the shareholders in a nonliquidating distribution will usually be classified as a dividend up to the amount of the corporation's retained earnings stock basis taxable income for the year earnings and profits.

a. True
b. False

It is assumed that dividends comes from earnings and profits so when a company distributes dividends, the total amount of those dividends cannot exceed the total amount of accumulated earnings and profits that the company has.

If the dividends exceed this amount, then they are to be considered as a return on capital to the shareholder and this is beholden to a different tax regime.

Distributions from corporations to the shareholders in a nonliquidating distribution will usually be classified as a dividend up to the amount of the corporation's retained earnings stock basis taxable income for the year earnings and profits. a. True b. False

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Distributions from corporations to the shareholders in a nonliquidating distribution will usually be classified as a dividend up to the amount of the corporation's retained earnings stock basis taxable income for the year earnings and profits.

a. True
b. False