Robin Corporation, a calendar year taxpayer, has a deficit in current E & P of $200,000 and a $580,000 positive balance in accumulated E & P. If Robin determines that a $700,000 distribution to its shareholders is appropriate at some point during the year, what is the maximum amount of the distribution that could potentially be treated as a dividend?

In the event that the profit is appropriated toward the beginning of the year, at that point the gathered E&P have a positive equalization of $580000 and the whole measure of $580000 can be disseminated as profit. In the event that the profit is paid whenever during the year, at that point the equalization in collected E&P is set off by the deficiency in the present year.  

Subsequently , the most extreme measure of the appropriation that can be treated as a profit is $580000.

The maximum amount of the distribution that can be treated as a dividend is $580,000.  

Explanation:

Earning and Profit are regarded as Dividends to the shareholder so the dividend income value will be $ 580,000. If the dividend is distributed at the start of the year, then the accumulated E&P have a positive balance of $580,000 and the entire amount of $580,000 can be distributed as dividend. If the dividend is paid at any time during the year, then the balance in accumulated E&P is set off by the deficit in the current year.  

Therefore, the maximum amount of the distribution that can be treated as a dividend is $580,000.  

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