Lesson 5A-Objectives

After completing this lesson, students should be able to:

1.	Determine the taxable status of corporate distributions not in exchange for stock, based on the existence or non existence of earnings and profits. 

2.	Explain adjustments that are made to corporate taxable income to determine earnings and profits. 

3.	Calculate earnings and profits from a hypothecial fact situation.   

4.	Understand how the taxable status of single or multiple distributions within the same taxable year may be affected by the existence of only current or only accumulated earnings and profits.

5.	Define the following terms with respect to dividend distributions, and explain their potential significance in determining the character of income recieved and/or the year of income recognition by the distributee:
	a.  declaration date
	b.  dividend "on" sale
	c.  record date
	d.  payment date

6.	Explain the taxation of distributions from S Corporations to their shareholders.

7.  State the circumstances when an S Corporation may be subject to the "built in gains" tax and the tax on excess passive investment income.  Recognize when "too much" excess passive investment income may lead to termination of S status.