Motivation to Pay Dividends

Karla Heyne is the sole shareholder of XYZ Corporation. XYZ Corporation owned a parcel of vacant land that Karla thought would be an ideal location to build her personal residence. Consequently, XYZ distributed the land to Karla. Karla had the land appraised to determine the income both she and XYZ would recognize on the distribution. Because the first appraisal came in higher than she expected, she paid for a second appraisal from a different appraiser. The second appraisal was quite a bit lower so Karla used the second appraisal to determine the income she and XYZ recognized on the distribution. What do you think of Karla's approach to determining the value of the land? Use specific examples from the readings for this week and any additional sources you discover to help you construct your post.