Chapter 4 Question 4

During the cutsent year, Apha Corporation distributes the assets listed below to as sole shareholder, Betty and E\&P purposos are the same. Resd the requirement. Begin by coenpleting the table for distabutions a, b, and c. (Abbreviations used fnc = Incroase, dec a docrease,) a. A parcel of land used in Alpha's business that has a $350,000 FMV and a $320,000 adjusted basis. b. Assume the same facts as in Part a except that the land is subject to a $110,000 mortgage. c. FIFO inventory having a $32,000 FMV and a $21,000 adjusted basis. d. A building used in Alpha's business having an original cost of $260,000, a $700,000FMV, and a $180,000 adjusted basis for taxable income purposes. Alpha has claimed $80,000 of depreciation for taxable income purposes under the straight-line method. Depreciation for earnings and profits (E\&P) purposes is $70,000. e. An automobile used in Alpha's business having an original cost of $10,000, a $9,000FMV, and a $4,800 adjusted basis. For taxable income purposes, Alpha has claimed \$5,200 of MACRS depreciation on the automobile. For E\&P purposes, depreciation is $4,300. f. Installment obligations having a $34,000 face amount (and FMV) and a $23,800 adjusted basis. The obligations were created when Alpha sold a Sec. 1231 asset. Requirement For each asset listed, determine the gross income recognized by Betty, her basis in the asset, the amount of gain or loss recognized by Alpha, and the effect of the distribution on Alpha's E\&P