Problem 5-38 (LO. 1, 5) Heather, an individual, owns all of the outstanding stock in Silver Corporation. Heather purchased her stock in Silver nine years ago, and her basis is $56,000. At the beginning of this year, the corporation has $76,000 of accumulated E & P and no current E & P (before considering the effect of the distributions as noted below). What are the tax consequences to Heather amount and type of income and basis in property received) and Silver Corporation (gain or loss and effect on E & P) in each of the following independent situations? If an amount is zero, enter "0". a. Silver distributes land to Heather. The land was held as an investment and has a fair market value of $54,000 and an adjusted basis of $42,000. Heather has a of s of $ and her basis in the land is Silver recognizes a After the distribution, the E & P beginning balance for next year is s of accumulated E & P. of current E & P and $ b. Silver distributes land to Heather. The land was held as an investment and has a fair market value of $54,000 and an adjusted basis of $42,000. Assume that Silver Corporation has no current or accumulated E & P prior to the distribution. Heather has a dividend of $ and her stock basis after the distribution is s Heather's basis in the land is . Silver recognizes a of s . After the distribution, Silver has of current E & P and $ of accumulated E & P. C. Silver distributes land to Heather. The land was held as an investment and has a fair market value of $54,000 and an adjusted basis of $42,000. The land distributed is subject to a $46,000 mortgage (which Heather assumes). Assume the corporation has $76,000 of accumulated E & P and no current E & P. Heather has a of $ and her basis in the land is $ Silver recognizes a After the distribution, the E & P beginning balance for next year is $ of of current E & P and $ of accumulated E & P. d. Silver distributes land to Heather. The land was held as an investment and has a fair market value of $54,000 and an adjusted basis of $62,000 on the date of the distribution. Assume the corporation has $76,000 of accumulated E & P and no current E & P. Heather has a of 5 and her basis in the land is Silver realizes a After the distribution, the E & P beginning balance for next year is s of $ of accumulated E & P. e. Silver decides to distribute equipment used in its business. The equipment has a $14,000 market value, a $1,200 adjusted basis for income tax purposes, and a $5,200 adjusted basis for E & P purposes. When the equipment was purchased four years ago, its original fair market value was $18,000. Assume the corporation has $76,000 of accumulated E & P and no current E & P. Heather has a of $ of $ and her basis in the equipment is $ Silver recognizes on the distribution. After the distribution, the E & P beginning balance for next year is of accumulated E & P. of current E & P and s
