Puffin Corporation has E & P of $240,000.It distributes land with a fair market value of $70,000 (adjusted basis of $25,000)to its sole shareholder,Bonnie.The land is subject to a liability of $55,000 that Bonnie assumes.Bonnie has:

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Bonnie's dividend income is $15,000,measured by the fair market value of the property ($70,000)less the liability on the property ($55,000).Bonnie has a basis in the land of $70,000 (fair market value).

Puffin Corporation Has E & P of $240,000