A sole shareholder receives a piece of land from a corporation as a dividend distribution.The land has a basis of $40,000 and a fair market value of $80,000;the shareholder's basis in his stock is $20,000,and this distribution is the only corporate activity for the year except for paying any tax owed on the distribution.At the beginning of the year,the corporation had only $5,000 in accumulated earnings and profits.How will this distribution be treated for tax purposes by the shareholder?
a.$80,000 dividend
b.$39,000 dividend;$41,000 capital gain
c.$39,000 dividend;$20,000 return of capital;$21,000 capital gain
d.$60,000 dividend;$20,000 return of capital
e.None of the above

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The Answer of A sole shareholder receives a piece of land from a corporation as a dividend distribution.The land has a basis of $40,000 and a fair market value of $80,000;the shareholder's basis in his stock is $20,000,and this distribution is the only corporate activity for the year except for paying any tax owed on the distribution.At the beginning of the year,the corporation had only $5,000 in accumulated earnings and profits.How will this distribution be treated for tax purposes by the shareholder?
a.$80,000 dividend
b.$39,000 dividend;$41,000 capital gain
c.$39,000 dividend;$20,000 return of capital;$21,000 capital gain
d.$60,000 dividend;$20,000 return of capital
e.None of the above

A Sole Shareholder Receives a Piece of Land from a Corporation