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safezone safezone
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In the current year, Red Corporation has $100,000 of current and accumulated E&P. On March 2, Red Corporation distributes to Randy, a shareholder, a parcel of land (a capital asset) having a $60,000 FMV. The land has a $30,000 adjusted basis (for both tax and E&P purposes) to Red Corporation and is subject to an $8,000 mortgage, which Randy assumes. Assume a 34% marginal corporate tax rate.
a)   What is the amount and character of the income Randy recognizes as a result of the distribution?
b)   What is Randy's basis for the land?
c)   What is the amount and character of Red Corporation's gain or loss as a result of the distribution?
d)   What effect does the distribution have on Red Corporation's E&P?
Textbook 
Prentice Hall's Federal Taxation 2014 Corporations, Partnerships, Estates & Trusts

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


Edition: 27th
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That's not philosophy, it's geometry
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strwbrrystrwbrry
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