Ask Question
31 October, 07:54

ABC Corporation has E & P of $240,000. It distributes land with a fair market value of $70,000 (adjusted basis of $25,000) to its sole shareholder, Paul. The land is subject to a liability of $55,000 that Paul assumes. Paul has: A

a. Taxable dividend of $15,000.

b. A taxable dividend of $25,000.

c. A taxable dividend of $45,000.

d. A taxable dividend of $70,000.

e. A basis in the machinery of $55,000

+5
Answers (1)
  1. 31 October, 10:13
    0
    Answer: Paul has a taxable dividend of $15,000.

    Explanation:

    From the question, we are informed that ABC Corporation has E & P of $240,000 and distributes land with a fair market value of $70,000 (adjusted basis of $25,000) to its sole shareholder, Paul. We are further informed that the land is subject to a liability of $55,000.

    The taxable dividend will be the difference between the fair market value of land and the liability on the land. This will be:

    = $70,000 - $55,000

    = $15,000

    Therefore, Paul has a taxable dividend of $15,000.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “ABC Corporation has E & P of $240,000. It distributes land with a fair market value of $70,000 (adjusted basis of $25,000) to its sole ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers