On 1/1/x2, P Co. had accumulated E&P totaling $10,000. During 20x2, P Co. made the following distributions to its shareholders:

J - $25,000 cash on 9/7/x2 M - Property (FMV $75,000; Basis $65,000) on 11/3/x2

J's basis in his P Co. stock is $10,000. M's basis in his P Co. stock is $30,000. P Co. had current E&P from operations in 20x2 totaling $30,000.

1) P Co.s recognized gain or loss on the distribution is

$10,000

0

None of these.

$75,000

2) J should characterize the distribution as follows:

$20,000 dividend; $5,000 return of capital

$25,000 dividend

None of these.

$17,500 dividend; $7,500 return of capital 3) M should characterize the distribution as follows:

$22,500 dividend; $30,000 return of capital; $22,500 capital gain

$30,000 dividend; $30,000 return of capital; $15,000 capital gain

$75,000 dividend

None of these. 4) If the property distributed was subject to a $90,000 mortgage, under Code 311, P Co.'s gain or loss on the distribution is Group of answer choices

$25,000 gain

$10,000 gain

0

None of these.