What is the tax impact to a C corporation or an S corporation when it makes a (noncash)property distribution to a shareholder?
A)Recognizes either gain or loss.
B)Does not recognize gain or loss.
C)Recognizes gain but not loss.
D)Recognizes loss only.

Question

Quizplus · Accepted Answer

When a C corporation or an S corporation makes a noncash property distribution to a shareholder, the corporation recognizes gain but not loss. This is because the distribution is treated as if the corporation sold the property at its fair market value. If the fair market value exceeds the corporation's basis in the property, a gain is recognized. However, a loss is not recognized in such distributions.

What Is the Tax Impact to a C Corporation or an S