Cpa 01771 pii nov 93 44 page 9 if an s corporation

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Unformatted text preview: common shareholder distribution ($5,000) is return of capital. Choice "c" is incorrect. Please refer to the discussion above for choice "b". As mentioned, preferred shareholders are paid before common shareholders are paid. This answer choice incorrectly assumes that the common shareholders are allocated their $10,000 first as dividend income and the preferred shareholders receive the balance of E&P ($15,000) as dividend income. 38 © 2009 DeVry/Becker Educational Development Corp. All rights reserved. Maxixishere Pdf Collection Becker CPA Review, PassMaster Questions Lecture: Regulation 3 Choice "d" is incorrect. Please refer to the discussion above for choice "b". The corporation has $25,000 of available E&P from which to distribute to the shareholders. Distributions are deemed to come from current E&P first and then from accumulated E&P (of which there is zero in this case). Only the excess is allocated to return of capital (to the extent of capital) and then to capital gain distribution, if excess remains. CPA-05549 Type1 M/C A-D Corr Ans: C PM#113...
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This note was uploaded on 06/14/2013 for the course ACCOUNTING Regulation taught by Professor Becker during the Fall '10 term at Keller Graduate School of Management.

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