Your client, Heron Corporation , has a deficit in accumulated E & P

of $300,000. Starting this year, it expects to generate annual E & P of

$150,000 for the next four years and would like to distribute this amount to its shareholders

. How should Heron Corporation distribute the $600,000 over the four-year

period to provide the least amount of dividend income to its shareholders (a ll individuals)?

In a letter to your client, make appropriate suggestions on how this should

be done. Also prepare a memo for your firm's file . Heron Corporation's address is

12 Nature Trail Way, Daytona Beach, FL 32114.