McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 32

True or False. A calendar-year corporation has positive current E P of $100 and accumulated negative E P of $200. A cash distribution of $100 to the corporation's sole shareholder at year-end will not be treated as a dividend because total E P is negative $100. Explain.