Chapter 4, Problem 8QE

Under what circumstances might a salary or bonus be more appropriate than interest on capital balances as a means of allocating profits?

Which of the following statements is incorrect?     Earnings and profits are conceptually similar to retained earnings.     A distribution from earnings and profits in excess of stockholder basis is a nontaxable return of capital.     A distribution of appreciated property creates a gain to the corporation.     Distributions paid in excess of earnings and profits are nontaxable to the extent of stockholder basis.

Using the agency theory, explain how dividend policy is impacted positivley.

The Principle of Taxation class: What is the difference between income which is "realized" and income which is "recognized"?  Which respect to gains/losses from Capital Assets like equity securities (stock), at what point is the gain realized and when is it currently recognized?