f. No. It would not make any difference if Johns stock were redeemed for the property listed. Because John owns all the Jamaica stock, any redemption will be treated as a dividend to the extent of Jamaicas E&P.

g. Best option: cash; worst option: ABC stock. The best option probably would be cash so that Jamaica would not have to recognize any gain. The worst option probably would be the ABC stock because the loss of $22,000 on the stock could never be recognized by John or Jamaica. This option should be avoided. Of the property distributions resulting in gains, the installment obligation seems least objectionable because it triggers the least gain recognition to the corporation. However, John recognizes a $50,000 dividend currently, but the receipt of cash will be spread over the remaining term of the installment obligation.

Please give me some specific reasons and background knowledge behind the answers f and g.

John owns all 100 shares of stock in Jamaica Corporation, which has $100,000 of current E&P. John would like to receive a $50,000 distribution from the corporation. Jamaica owns several assets that it could distribute to John. What are the tax consequences of Jamaica's distributing each of the following assets? Jamaica has a 21% tax rate and, un- less stated otherwise, its bases for E&P and taxable income purposes are the same. a. $50,000 cash. b. 100 shares of XYZ stock purchased two years ago for $10,000 and now worth $50,000. c. 100 shares of ABC stock purchased one year ago for $72,000 and now worth $50,000. d. Equipment purchased four years ago for $120,000 that now has a tax adjusted basis of $22,000 and an E&P adjusted basis of $40,000. John would assume a liability of $31,000 on the equipment. The equipment is now worth $81,000. c. An installment obligation with a face value of $50,000 and a basis of $32,000. Jamaica acquired this obligation three years ago when it sold land held as an investment. f. Would your answers in Parts a-c change if Jamaica redeems 50 of John's shares for cach of the properties listed? g. Based on the foregoing results, which distribution would you recommend? Which distribution(s) should be avoided? h. Would your answers in Parts a-e change if John's 100 shares represented one third of Jamaica's outstanding shares, unrelated parties owned the remaining 200 shares, and Jamaica exchanged all of John's shares for each of the properties listed? i. If John were an investor, would treating the distribution as a sale be preferable to treat- ing the distribution as a dividend? Why or why not