Fly by Night, Inc. is a calendar year corporation. On January 1, it had accumulated E&P of $200,000. During the year, it generated a deficit in current E&P of $90,000. On July 1 (of a leap year) it distributed $210,000. What part of that distribution was a dividend?

In order to determine the portion of Fly by Night, Inc.’s distribution that was a dividend, it is necessary to understand how Earnings and Profits (E&P) works. E&P is a measure of a corporation’s financial performance over time – it reflects the cumulative net income generated since its formation, including all profits earned and losses incurred up until the present date.

Using the information provided about Fly by Night, Inc., we can calculate its total E&P on July 1. The company had an accumulated E&P at January 1 of $200,000 as well as a current deficit in E&P for the year of $90,000. Therefore, its total E&P on July 1 would be $110,000 ($200k + -$90k).

Since Fly by Night distributed $210k during this period but only had a total accumulated E & P of $110k on July 1st (of leap year), it would mean that 100% ($210k/$110k) or all of their distributions were considered dividends according to IRS rules – anything distributed beyond what has been accrued must be treated as dividends rather than corporate profit.

It is important to note that this scenario assumes that none of the previously earned profits have been used for expenses or other purposes before July 1 – if any funds were used for these purposes prior to making this distribution then only some portion would have been deemed dividend payments with the remainder being categorized under other income types such as salary or non-operating income. In addition, some distributions might not qualify for dividends based on their intended purpose. Therefore additional research may be needed.