Distributing Corporation purchased land for $50,000 several years ago.The value of the land has since declined because the adjacent land has been chosen as the site of a toxic waste dump.Good planning would suggest that instead of selling the land and distributing the proceeds, the corporation should distribute the land to its shareholders and allow them to sell it.(Ignore any possible assignment of income problems.)

Question

Quizplus · Accepted Answer

Good planning would not suggest distributing depreciated land to shareholders to avoid recognizing the loss. The corporation should recognize the loss on its books, which could provide tax benefits. Distributing depreciated assets without recognizing the loss could be less advantageous from a tax perspective.

Distributing Corporation Purchased Land for $50,000 Several Years Ago