A calendar-year corporation has positive current E&P of $500 and accumulatednegative E&P of $1,200. The corporation makes a $400 distribution to its soleshareholder. Which of the following statements is true?
A) The distribution will be a dividend because current earnings and profits arepositive and exceed the distribution.
B) A distribution from a corporation to a shareholder is always a dividend, regardlessof the balance in earnings and profits.
C) The distribution may be a dividend, depending on whether total earnings andprofits at the date of the distribution is positive.
D) The distribution will not be a dividend because total earnings and profits is anegative $700.
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