Keisha is a shareholder in a corporation.She received a distribution of property from the earnings and profits of the corporation.Keisha will report dividend income equal to the FMV of the property received.

Question

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When a shareholder receives a distribution of property from the earnings and profits of a corporation, it is generally considered a dividend distribution. The shareholder must report the dividend income equal to the fair market value (FMV) of the property received at the time of the distribution. Therefore, Keisha will report dividend income equal to the FMV of the property received.

Keisha Is a Shareholder in a Corporation