Corporation ("C") had accumulated E&P of $30,000 at the beginning of the current year. During the current year, X distributed property fair market value $30,000, adjusted basis of $35,000 and subject to a liability of $10,000 to shareholder A. This was the only transaction C had during the current year. As a result, A will recognize $20,000 dividend income, and C will have accumulated E&P of $5,000 at the beginning of the next year. True False

SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
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Chapter17: Property Transactions: § 1231 And Recapture Provisions
Section: Chapter Questions
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C Corporation ("C") had accumulated E&P of $30,000 at the beginning of the current year. During the current year, X distributed property fair market value $30,000, adjusted basis of $35,000 and subject to a liability of $10,000 to shareholder A.  This was the only transaction C had during the current year.  As a result, A will recognize $20,000 dividend income, and C will have accumulated E&P of $5,000 at the beginning of the next year.

True

False

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