McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 15

Tiger Corporation reported taxable income of $500,000 from operations for 2011.The company paid federal income taxes of $170,000 on this taxable income.During the year, the company made a distribution of land to its sole shareholder, Mike Woods.The land's fair market value was $75,000 and its tax and E P basis to Tiger was $125,000.Mike assumed a mortgage attached to the land of $15,000.Any gain from the distribution will be taxed at 34 percent.The company had accumulated E P of $750,000 at the beginning of the year.a.Compute Tiger's total taxable income and federal income tax paid as a result of the distribution.b.Compute Tiger's current E P for 2011.c.Compute Tiger's accumulated E P at the beginning of 2012.d.What amount of dividend income does Mike report as a result of the distribution?
e.What is Mike's tax basis in the land he received from Tiger?