Molokai Corporation distributed a building valued at $45,000 (basis of $20,000) to its sole shareholder.What is the effect of this distribution on the corporation's taxable income?

Question

Quizplus · Accepted Answer

The corporation recognizes a $25,000 taxable gain on the distribution of the building to its shareholder, calculated as the fair market value ($45,000) minus its basis ($20,000).

Molokai Corporation Distributed a Building Valued at $45,000 (Basis of $20,000)