I:16-53 Property Distributions. Old Corporation has liquidity problems but wants to maintain its existing dividend policy. Old

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I:16-53 Property Distributions. Old Corporation has liquidity problems but wants to maintain its existing dividend policy. Old distributes investment land to its two shareholders. The land has a $30,000 adjusted basis and a $100,000 FMV. Old has an E&P balance of $300,000

(excluding the effects of the distribution). Nancy receives 50% of the land, and Palm Corporation receives the remaining 50%. Assume no taxable income or loss from current year operations.

a. What distribution amount is taxable to Nancy and Palm?

b. What is the basis of the property to Nancy and Palm?

c. What are the income tax consequences of the distribution to Old?

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