A corporation distributes land worth $200,000 to its sole shareholder.The corporation had purchased the land several years ago for $120,000.The corporation has over $1 million of E&P.How much income will the corporation and the shareholder recognize?

Question

Quizplus · Accepted Answer

D) The corporation has to recognize the gain when it distributes appreciated property. The shareholder receives a dividend equal to the FMV of the distributed property.

A Corporation Distributes Land Worth $200,000 to Its Sole Shareholder