H Corp. distributed land with a fair market value of $100,000 (basis $20,000) to Tina, a 70% shareholder. Determine the amount of the dividend and basis of the land to Tina if E&P is $80,000. A.) Dividend:$80,000; Basis in the land:$100,000 B.) Dividend:$80,000; Basis in the land:$80,000 C.) Dividend:$100,000; Basis in the land:$100,000 D.) Dividend:$100,000; Basis in the land:$20,000

The option D.) is the correct option. In Case instead of the dividend of $100,000 FMV land with a basis of $20,000 is distributed, the shareholder has to recognize the FMV of land as dividend income. So, the Dividend is $100,000 and the basis of the land is $20,000

(1) Comments please explain why shareholder has to recognize the $100,000. Dividend: $80,000 and basis $80,00 (100,000 - $20,000)