19-45 (LO. 5) Iris Corporation owns 30% of Fresia Corporation's stock. On November 15, Fresia Corporation, with current E & P of $320,000, distributes land (fair market value of $100,000; basis of $160,000) to Iris. The land is subject to a liability of $80,000, which Iris assumes. Click here to view the Dividend Received Deduction Table. a. How is Iris Corporation taxed on the distribution? Iris Corporation has dividend income of $ 20,000 and a dividends received deduction of 16,000 X Iris Corporation has a basis of $ 16,000 X in the land. Feedback Check My Work Although most corporate distributions are cash, a corporation may distribute a property dividend for various reasons. The shareholders could want a particular property that is held by the corporation. Similarly, a corporation with low cash reserves may still want to distribute a dividend to its shareholders. Property distributions have the same impact as distributions of cash except for the effects attributable to any difference between the basis and the fair market value of the distributed property. b. What is Fresia Corporation's E & P after the distribution? 80,000 X. Feedback Check My Work Incorrect Feedback Check My Work Partially correct