Regulation 3 PassMaster Questions

# A b c d 210000 240000 275000 305000 cpa 04755

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Unformatted text preview: ixishere Pdf Collection Becker CPA Review, PassMaster Questions Lecture: Regulation 3 CPA-04731 Explanation Choice "d" is correct. When a corporation makes multiple distributions during the taxable year, current E&P is first allocated to each distribution on a pro rata basis; then, accumulated E&P is applied in chronological order beginning with the earliest distribution. In this example, where there are two distributions made by Bridge, the current and accumulated E&P are allocated as follows: March distribution \$20,000 Current E& P - \$20,000 (March distribution)/\$40,000 (total distributions) x \$10,000 (Current E&P) = Amount out of Current E&P \$5,000 Accumulated E&P = allocate first come first serve = chronological until either Acc E&P is used up or entire distribution is dividend. Here \$15,000 Accumulated E&P = \$15,000 remaining distribution; thus use \$0 remaining in Accumulated E&P \$15,000 Entire distribution is a dividend \$20,000 July distribution \$20,000 Current E& P - \$20,000 (July distribution)...
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