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Corporation A, a calendar-year C corporation that began conducting business 18 years ago, had accumulated...

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Accounting

Corporation A, a calendar-year C corporation that began conducting business 18 years ago, had accumulated earnings and profits of $26,000 as of January 1 of the current year. On April 1, A distributed $40,000 in cash to Ms. X, Corporation As sole shareholder. Corporation A had earnings and profits of $4,000 for the current year. Ms. X had an adjusted basis of $18,000 in her stock before the distribution. What are Ms. Xs ordinary dividend income and the return of capital due to this distribution?
Dividend Income
Return of Capital
A.
Dividend Income
$40,000
Return of Capital
$0
B.
Dividend Income
$22,000
Return of Capital
$18,000
C.
Dividend Income
$30,000
Return of Capital
$10,000
D.
Dividend Income
$10,000
Return of Capital
$30,000

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