1. Green, Inc., a C corporation, distributes a tract of land held as an investment (FMV = $500,000, basis = $220,000) and its mortgage of $550,000 to Susan at the end of the year. Green, Inc. has a current E&P of $190,000 for the year, and started the year an accumulated E & P of $60,000. Greens marginal tax rate is 21%. Susan has an individual marginal tax rate of 33% and both a dividend and a long-term capital gains tax rate of 15%. Susan owns 200 of Greens 1,000 shares outstanding and her basis in her Green stock is $20,000. Susan has held her stock for two years. The distribution does not qualify as a stock redemption, but would be classified as a qualified dividend.

1. What is Greens recognized gain on the distribution? __________________

2. What is the increase in Greens tax liability as a result of the distribution?

__________________

3. What is the amount of Susans distribution? __________________

4. How much of the distribution is classified as a dividend? __________________

5. How much of the distribution is classified as a return of capital? __________________

6. How much of the distribution is taxed as a capital gain? __________________

7. What is the increase in Susans tax liability as a result of the distribution? __________________

8. What is Greens ending E&P (after the distribution)? __________________

1. What is Susans basis in the land? __________________

10. What is Susans ending basis in her Green stock? __________________