Problem 5-42 (LO. 1, 5) Cornflower Corporation distributes equipment (adjusted basis of $70,000, fair market value of $55,000) to its shareholder, Roy. Assume that Cornflower has more than $100,000 of current E & P. What are the tax consequences to Cornflower Corporation and to Roy? Roy has a taxable dividend of and his basis in the equipment is $ Cornflower Corporation has a realized gain which is recognized. The distribution Cornflower's E & P by $