An S Corporation Distributes Land with a Basis of $60,000

question 29

Multiple Choice

An S corporation distributes land with a basis of $60,000 and a FMV of $90,000 to its shareholders. The tax results of the distribution will be

• A)no gain to the corporation or to the shareholders.
• B)$30,000 of gain recognized by the S corporation and no pass through to the shareholders.
• C)no gain recognized by the corporation but $30,000 of gain recognized by the shareholders.
• D)$30,000 of gain recognized by the S corporation which is passed through to the shareholders.

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Definitions:

Opportunity Cost

Opportunity cost is the value of the next best alternative forgone as a result of making a decision.

Bananas

A curved, yellow fruit that is rich in potassium and can be eaten raw or used in cooking and baking.

Exports

Exports are goods or services produced in one country and sold to buyers in another, contributing to a nation's GDP and influencing its balance of trade.

Produced Domestically

Goods or services that are manufactured or created within a country's borders.