We Build It Right Construction, Inc. was organized as a C corporation on January $1,2024.$ During the year, the company distributed $$80,000$ in shareholder dividends. Choose the response that accurately describes the consequences of this distribution.

We Build It Right Construction will:

Increase its earnings and profits by the amount distributed.

Include the distribution in taxable income subject to the $21\%$ corporate income tax rate.

Recognize a capital gain on the distribution.

Reduce taxable income by the total $$80,000$ distributed.

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