Alpha Corp., an S corporation, distributes land (a capital asset) to a 50%shareholder, Nancy. According to Alpha Corp's records, the land has a $7,000 basis and a $15,000 fair market value. Before taking the distribution in to account, Nancy has a stock basis of $8,500 (after taking all routine operating activity into account). Other shareholders receive a comparable distribution of cash.

(a)How much gain (if any) is recognized by Alpha and what is its character?

The corporation will recognize an $___________ capital gain.

(b) What is Nancy's basis in the distributed land?

Nancy will take a basis of $__________ (FMV) in the land.

(c)What is Nancy's basis in her stock after the distribution?

Ending stock basis is $_________ .

(d) What amount of income, if any, does Nancy recognize with respect to the distribution?

choose the word:

Because the distribution (exceeds / is less than )her stock basis, Nancy must recognize (gain / loss) on (excess / scanty) the distribution.

Her Capital is $___________ .

In addition, she will recognize her $________ share of the appreciation on the land that is recognized at the corporate level when the distribution takes place.