The correct answer is: D. To distribute dividend.
Profits before incorporation are the profits that a company makes before it is incorporated. These profits can be used for a variety of purposes, such as:
- To write off capital losses. This means that the company can use the profits to offset any losses that it has made on capital assets, such as property or equipment.
- To write off goodwill. This means that the company can use the profits to offset any goodwill that it has acquired. Goodwill is an intangible asset that represents the value of a company’s reputation and customer base.
- To create capital accumulation. This means that the company can use the profits to build up its cash reserves. This can be useful for future investments or for meeting unexpected expenses.
However, profits before incorporation cannot be used to distribute dividends. This is because dividends are payments that are made to shareholders out of a company’s profits. A company cannot distribute dividends until it has been incorporated. This is because, before incorporation, the company is not a legal entity and does not have the same rights and responsibilities as a corporation.
In addition, distributing dividends before incorporation could be considered a fraudulent conveyance. A fraudulent conveyance is a transfer of assets that is made with the intent to defraud creditors. If a company distributes dividends before incorporation, it could be found to have made a fraudulent conveyance if it later goes bankrupt.
Therefore, the correct answer is: D. To distribute dividend.