Common use of Election to distribute earnings and profits Clause in Contracts

Election to distribute earnings and profits. first—(i) In general. An S cor- poration with accumulated earnings and profits may elect under this para- graph (f)(2) for any taxable year to dis- tribute earnings and profits first as provided in section 1368(e)(3). Except as provided in paragraph (f)(2)(ii) of this section, distributions made by an S corporation making this election are treated as made first from earnings and profits under section 1368(c)(2) and sec- ond from the AAA under section 1368(c)(1). Any remaining portion of the distribution is treated in the manner provided in section 1368(b). This elec- tion is effective for all distributions made during the year for which the election is made.