Corkie Corporation distributes $80,000 cash along with land having a $60,000 adjusted basis and a $40,000 FMV to its shareholder Josh.What are the tax consequences to Corkie Corporation?

Question

Quizplus · Accepted Answer

The distribution of $80,000 cash along with land having a $60,000 adjusted basis and a $40,000 FMV will result in a loss realized of $20,000 ($60,000 - $40,000). However, this loss is not recognized for tax purposes since the property distributed is not considered a capital asset in the hands of the distributing corporation. Therefore, the correct answer is option B, a loss realized but not recognized.

Corkie Corporation Distributes $80,000 Cash Along with Land Having a $60,000