Robin Corporation distributes furniture (basis of $40,000? fair market value of $50,000) as a property dividend to its shareholders. The furniture is subject to a liability of $55,000. Robin Corporation recognizes gain of:
A) $55,000.
B) $15,000.
C) $10,000.
D) $0.
E) None of the above.

Question

Quizplus · Accepted Answer

Robin Corporation recognizes a gain equal to the excess of the liability over the basis of the property. The liability is $55,000, and the basis is $40,000, resulting in a gain of $15,000.

Robin Corporation Distributes Furniture (Basis of $40,000? Fair Market Value