Green Co. transferred a small piece of land to one of its shareholders as a dividend in kind. The land originally cost $50,000 and had a fair market value of $175,000 at the time of the transfer. The corporation will realize ________, and the shareholder will realize ________.

Question

Quizplus · Accepted Answer

The corporation will realize a taxable gain of $125,000 ($175,000 FMV minus $50,000 basis). The shareholder will realize a taxable capital gain of $125,000 (FMV of $175,000 minus $0 basis) and receive a dividend of the same amount.

Green Co Transferred a Small Piece of Land to One of of Its