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In the current year, Pearl Corporation has $300,000 of current and accumulated E&P. On June 3, ...

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In the current year, Pearl Corporation has $300,000 of current and accumulated E&P. On June 3, ...

In the current year, Pearl Corporation has $300,000 of current and accumulated E&P. On June 3, Pearl Corporation distributes a parcel of land (a capital asset) worth $120,000 to Betty, a shareholder. The land has a $60,000 adjusted basis to Pearl Corporation and is subject to a $16,000 mortgage, which Betty assumes. Assume a 34% marginal corporate tax rate.
a)   What is the amount and character of the income recognized by Betty as a result of the distribution?
b)   What is Betty's basis for the land?
c)   What is the amount and character of Pearl's gain or loss as a result of the distribution?
d)   What effect does the distribution have on Pearl's E&P?

Textbook

Prentice Hall's Federal Taxation 2014 Corporations, Partnerships, Estates & Trusts

Edition: 27^th

Authors: Anderson, Pope, Rupert

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That's not philosophy, it's geometry

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safezone Author

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7 years ago

I appreciate what you did here, answered it right Smiling Face with Open Mouth

joyceess

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Good timing, thanks!

missnoname

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Thanks for your help!!

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