Greatbrands, Inc was organized as a C corporation on January 1, 2020. During its first year in

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Question:

Greatbrands, Inc was organized as a C corporation on January 1, 2020. During its first year in business, the company earned enough profits to pay dividends to its shareholders. Choose the response that correctly describes the tax consequences of this distribution. Greatbrands, Inc will:

Options:

Increase their earnings and profits by the amount distributed

Pay a flat tax rate of 21% on the amount distributed

Recognize a capital gain on the distribution

Reduce its taxable income by the amount distributed