Determine Dividends by Shareholder Gains, Not Corporate E&P

Johnson proposes that shareholder gain from a dividend be determined based on the shareholder's own situation rather than the corporate earnings and profits account, which is often dysfunctional. If the stock value drops below the shareholder's basis by reason of the dividend, the shareholder has lost some investment, and the dividend is recovery of basis in full or in part. If the stock value is higher than shareholder basis even after the dividend, the shareholder has gain only