In the current year, Sedgwick Corporation has $100,000 of current and accumulated E&P. On March 3, Sedgwick
Question:
In the current year, Sedgwick Corporation has $100,000 of current and accumulated E&P. On March 3, Sedgwick distributes to its shareholder Dina a parcel of land (a capital asset) having a $56,000 FMV. The land has a $40,000 adjusted basis (for both taxable income and E&P purposes) to Sedgwick and is subject to an $8,000 mortgage, which Dina assumes. Assume a 21% corporate tax rate.
a. What are the amount and character of the income Dina recognizes as a result of the distribution?
b. What is Dina's basis in the land?
c. What are the amount and character of Sedgwick's gain or loss as a result of the distribution?
d. What effect does the distribution have on Sedgwick's E&P?
CorporationA Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Step by Step Answer:
a 48000 dividend Dina recognizes a taxable dividend of 48000 560...View the full answer
Federal Taxation 2019 Comprehensive
ISBN: 9780134833194
32nd Edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
