83 - capital to the extent of the shareholder’s basis in...

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Under what circumstances is a dividend non-taxable to a shareholder recipient? Answer: When a distribution is made by a corporation to its shareholders, the distribution is a taxable dividend to the extent of current or accumulated earnings and profits of the corporation. If the distribution exceeds E&P, it is non-taxable return of
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Unformatted text preview: capital to the extent of the shareholder’s basis in the stock. Once the distribution exceeds basis, the excess is treated as a capital gain. Thus, a distribution is non-taxable if it is in excess of the E&P of the corporation and the excess is less than the shareholder’s basis in the stock....
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This note was uploaded on 09/16/2011 for the course ACCT 145 taught by Professor Eric during the Spring '11 term at Palm Beach Community College.

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