Global Corporation distributed property with an $850,000 fair market value and a $415,000 adjusted basis to one of its shareholders. The property was subject to a $230,000 mortgage, which the shareholder assumed. Global has ample E & P to cover any distribution made during the year. What is the amount of the shareholder’s dividend income on the distribution? What

SWFT Comprehensive Volume 2019
42nd Edition
ISBN:9780357233306
Author:Maloney
Publisher:Maloney
Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations
Section: Chapter Questions
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Global Corporation distributed property with an $850,000 fair market value and a $415,000 adjusted basis to one of its shareholders. The property was subject to a $230,000 mortgage, which the shareholder assumed. Global has ample E & P to cover any distribution made during the year. What is the amount of the shareholder’s dividend income on the distribution? What is the shareholder’s basis in the property received?

  • For the shareholder:
    • What is the amount of the distribution?
    • What is the basis of the property in the shareholder's hands?
  • For the corporation:
    • Is a gain or loss recognized as a result of the distribution?
    • What is the effect of the distribution on E & P?
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