Monal Corporation Merged with Bobwhite Corporation Two Years Ago

Multiple Choice

Monal Corporation merged with Bobwhite Corporation two years ago. At the time of the merger, Monal held an earnings and profits E & P) deficit of $250,000, and Bobwhite had a positive E & P of $200,000. Last year's current E & P was $ 100,000 for the successor company. Despite having only $10,000 E & P for the current year, Monal makes a distribution to its shareholders of $270,000. How is the distribution taxed to the shareholders?

A) $270,000 is taxable.
B) $210,000 is taxable.
C) $110,000 is taxable.
D) $60,000 is taxable.
E) None of these amounts is correct.