5. Larry owns 750 of the 1,000 shares of Clipper Corporation. Larry's cousin, Ford, owns 50 shares and Larry's grandfather, Rooney, owns the remaining 200 shares. Larry paid $100 per share for the stock eight years ago. Clipper has no accumulated E \& P , and $380,000 of current E \& P before considering the effect of this transaction. During the year Clipper redeems 550 shares of his stock for land with FMV of $700,000, basis to Clipper of $400,000, and liability assumed by Larry of $250,000 (this is the only distribution that occurred during the year) a. What are the tax consequences to Larry (Larry's gain/loss/dividend income, basis in stock of Clipper, basis in land received?) b. What is the effect on Clipper Corporation and Clipper's E \& P? 5. Larry owns 750 of the 1,000 shares of Clipper Corporation. Larry's cousin, Ford, owns 50 shares and Larry's grandfather, Rooney, owns the remaining 200 shares. Larry paid $100 per share for the stock eight years ago. Clipper has no accumulated E \& P , and $380,000 of current E \& P before considering the effect of this transaction. During the year Clipper redeems 550 shares of his stock for land with FMV of $700,000, basis to Clipper of $400,000, and liability assumed by Larry of $250,000 (this is the only distribution that occurred during the year) a. What are the tax consequences to Larry (Larry's gain/loss/dividend income, basis in stock of Clipper, basis in land received?) b. What is the effect on Clipper Corporation and Clipper's E \& P