Tennis, Corporation, a calendar-year corporation, had a deficit in accumulated earnings and profits of $(800,000) and a positive balance in current earnings and profits of $100,000. On December 31, 2021, Tennis, Corporation distributed a building to Darrel, its sole shareholder. The building had a fair market value of $500,000 and an adjusted basis to the corporation of $150,000. Darrel also assumed the $300,000 mortgage on the building. Darrel is in the 37% tax bracket . Determine the tax consequences to Darrel from this distribution of building and mortgage. Be
Tennis, Corporation, a calendar-year corporation, had a deficit in accumulated earnings and profits of $(800,000) and a positive balance in current earnings and profits of $100,000. On December 31, 2021, Tennis, Corporation distributed a building to Darrel, its sole shareholder. The building had a fair market value of $500,000 and an adjusted basis to the corporation of $150,000. Darrel also assumed the $300,000 mortgage on the building. Darrel is in the 37% tax bracket . Determine the tax consequences to Darrel from this distribution of building and mortgage. Be
Chapter6: Corporations: Redemptions And Liquidations
Section: Chapter Questions
Problem 54P
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Tennis, Corporation, a calendar-year corporation, had a deficit in
- Determine the tax consequences to Darrel from this distribution of building and mortgage. Be specific—and show your calculations.
- What are the tax consequences to Tennis, Corporation from this distribution?
- After this distribution, what are the earnings and profits of Tennis, Corporation?
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