TAX HOMEWORK

1. How does the Tax Code define a dividend?

2. How does the Tax Code define earnings and profits?

3. Explain how a corporate distribution to a shareholder is impacted in the following cases:

• The distributing corporation has sufficient current and accumulated earnings and profits to cover the distribution amount.

• The distributing corporation has sufficient current and accumulated earnings and profits to cover one-half of the distribution amount.

• The distributing corporation has no current and accumulated earnings and profits to cover any of the distribution amount and the distribution amount exceeds the shareholders stock basis.