Carolina Corporation, an S corporation, has no corporate E&P from its years as a C corporation. At the end of the year, it distributes a small parcel of land to its sole shareholder, Shadiya. The fair market value of the parcel is $70,000 and its tax basis is $40,000. Shadiyas basis in her stock is $14,000. Assume Carolina Corporation reported $0 taxable income before considering the tax consequences of the distribution.

b. How much gain must Shadiya recognize (if any) as a result of the distribution, what is her basis in her Carolina Corporation stock after the distribution, and what is her basis in the land?

Answer is complete but not entirely correct. Gain recognized 30,000 Stock basis 0 Land basis 70,000