During the year, DEF Corporation distributed land that it had used as a parking lot in its business (value $40,000, basis $5,000).DEF will recognize gain on the distribution.

Question

Quizplus · Accepted Answer

When a corporation distributes property that is appreciated in value, it must recognize the gain on the distribution. In this case, the land distributed by DEF Corporation has a value of $40,000, which is significantly greater than its basis of $5,000, meaning that DEF will recognize gain on the distribution.

During the Year, DEF Corporation Distributed Land That It Had