Purple Corporation has accumulated E & P of $100,000 on January 1, 2017 . In 2017, Purple has current E & P of $130,000 (before any distribution). On December 31, 2017, the corporation distributes $250,000 to its sole shareholder, Cindy (an individual). Purple Corporation's E & P as of January 1, 2018 is:
a. $0.
b. ($20,000).
c. $100,000.
d. $130,000.
e. None of the above.
a
RATIONALE: The $250,000 distribution will reduce the $230,000 balance in E & P to zero. A distribution may not generate a deficit in E & P.
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