Evergreen Corporation distributes land with a fair market value of $200,000 to its sole shareholder.Evergreen's tax basis in the land is $50,000.Assuming sufficient earnings and profits, the amount of dividend reported by the shareholder is $200,000.

Question

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When a corporation distributes property to its shareholder as a dividend, the amount of the dividend is equal to the fair market value of the property. Therefore, in this case, the amount of dividend reported by the shareholder would be $200,000, which is the fair market value of the land distributed by Evergreen Corporation.

Evergreen Corporation Distributes Land with a Fair Market Value of $200,000