Chance Corporation Has a $20,000 Deficit in Earnings and Profits

Multiple Choice

Chance Corporation has a $20,000 deficit in earnings and profits as of January 1,2013.During 2013,the corporation has current earnings and profits of $40,000 and makes a $70,000 cash distribution to its shareholders.What part of the distribution is taxable as dividend income to Chance's shareholders?

A) $ - 0 -
B) $20,000
C) $30,000
D) $40,000
E) $70,000