Distribution treated as a dividend

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Reference no: EM13150272

At the beginning of the year, Urritia Cements had a negative balance of $15,000 in its accumulated earnings and profits. During the year, it had taxable income of $10,000. On August 1, it distributed property with an adjusted basis of $5,000 and a fair market value of $8,000 to its sole shareholder, Pedro Urritia. How much of the distribution will be treated as a dividend?

A) $0

B) $5,000

C) $8,000

D) $10,000

Reference no: EM13150272

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