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TB MC Qu$.7-31($Static$)$ A calendar$-$year corporation has positive current...

A calendar$-$year corporation has positive current E&P of $$500$ and a deficit in accumulated E&P of $($$$1,200).$ The corporation makes a $$400$ distribution to its sole shareholder. Which of the following statements is true?

Multiple Choice

The distribution will not be a dividend because total E&P is a deficit.

The distribution may be a dividend, depending on whether net E&P $($current plus accumulated E&P$)$ at the date of the distribution is positive.

The distribution will be a dividend because current E&P is positive and exceeds the distribution.

A distribution from a corporation to a shareholder is always a dividend, regardless of the balance in E&P$.$