Transactions reclassified as a constructive dividend


Harold owns 100 percent of Clawson Company. Clawson's E&P is $500,000. Harold needs to withdraw $100,000 from the company. Which of the following transactions might be reclassified as a constructive (disguised) dividend?

a. $100,000 bonus; Harold's compensation (before the bonus) is $350,000, relatively equal to what other presidents of similarly sized companies earn.

b. $100,000 in return for a promissory note from Harold, due upon demand but not having a fixed due date.

c. $100,000 in return for property Harold would lease to the corporation.

d. $100,000 gift from the corporation to Harold.

e. All of the above.

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Accounting Basics: Transactions reclassified as a constructive dividend
Reference No:- TGS038568

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