Rose,an S corporation,distributes land to Walter,its only shareholder.Rose's adjusted basis for the land is $100,000,and the fair market value is $175,000.Rose has a recognized gain of $75,000 ($175,000 - $100,000)on the distribution.Walter's adjusted basis for the land is the fair market value of $175,000.

Question

Quizplus · Accepted Answer

The same rules apply to C and S corporations with respect to distributions of appreciated property,and gain is recognized at the corporate level.The shareholder's adjusted basis for the land is the fair market value.

Rose,an S Corporation,distributes Land to Walter,its Only Shareholder