Fargo Corporation holds $5,000,000 in accumulated E & P. It distributes to Leilei, one of its shareholders, land worth $1,945,440; basis of the land to Fargo is $1,621,200. Determine the Federal income tax consequences of the distribution to Fargo. to Fargo's E & P is $ Fargo Corporation recognizes a gain of s 324,240 . The net decrease 1,621,200. The shareholder has dividend income of $ 1,621,200 x Feedback Check My Work . Although most corporate distributions are cash, a corporation may distribute a property dividend for various reasons. The shareholders could want a particular property that is held by the corporation. Similarly, a corporation with low cash reserves may still want to distribute a dividend to its shareholders