Question
On May 10 of the current year, Kent Corporation distributes to its shareholder Rose $16000in cash and land (a capital asset) having a 78000 FMV.
On May 10 of the current year, Kent Corporation distributes to its shareholder Rose $16000in cash and land (a capital asset) having a 78000 FMV. The land has a 26000 adjusted basis (for both taxable income and E&P purposes) and is subject to a 90000 mortgage, which Rose assumes. Kent has an E&P balance exceeding the amount distributed and is subject to a 21 % corporate tax rate.
a. What are the amount and character of the income Rose recognizes as a result of the distribution?
b. What is Rose's basis in the land?
c. What are the amount and character of Kent's gain or loss as a result of the distribution?
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Essentials Of Forensic Accounting
Authors: Michael A Crain, William S Hopwood
2nd Edition
1948306441, 978-1948306447
