During the current year, a corporation distributed property with an adjusted basis of $100,000 and a fair

Question:

During the current year, a corporation distributed property with an adjusted basis of $100,000 and a fair market value of

$140,000 to its shareholders. Its earnings and profits for the year were $170,000, and accumulated earnings and profits on the first day of the year were $370,000. What is the amount of gain recognized by the corporation on the distribution?

a. $0

b. $40,000

c. $70,000

d. $140,000

e. None of the above

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