QUESTION 21 Corporation Z distributes in kind its long held Apple stock with an adjusted basis of $480 and a fair market value of $200 to shareholder C. Corporation Z also distributes Apple stock with an adjusted basis of $120 at a fair market value of $200 to shareholder D. ca. Corporation Z does not have loss on the distributions. b. The distributions to C will reduce E&P by $480 (but not create negative E&P). cc Corporation Z realizes gain of $80 on the distribution of the property and that amount less accrued income tax is added to E&P. d. All of the above. e. None of the above. QUESTION 22 Corporation Z is owned entirely by two individuals, C and D. C owns 60 shares of Z common stock bought in one transaction for $1,200. D owns 40 shares of Z common stock with a basis of $60 per share. The stock's fair market value is $40 per share. Z's E&P is $1,000. C sells 60 shares to Z for $1,800. The following statements are with regard to C. a. The redemption will be given dividend treatment. ob. The redemption will be given sale treatment under 302(b)(3), complete termination of interest. oc. It is impossible to tell whether the transaction will be given sale or dividend treatment. d. None of the above