54. LO.6, 9 The stock of Emerald Corporation is held equally by Barney and Faye. The shareholders would like to receive, as a dividend, value of $800,000 each. The corporation has the following assets that it can spare:

Asset Adjusted Basis to Emerald Corporation Fair Market Value Unimproved land $1,040,000 $800,000 Chevron stock 480,000 800,000 Both assets are held as investments. Emerald Corporation has a capital loss carryover from the previous year of $80,000 and has accumulated E & P in excess of $2 million.

Barney and Faye have come to you for advice. Suggest an attractive tax plan to carry out what the parties want. Write a letter (addressed to Emerald Corporation at P.O. Box 940, Rochester, NY 14692) describing your plan and its tax consequences.