Tar Heel Corporation Had Current and Accumulated E&P of $500,000

question 19

Multiple Choice

Tar Heel Corporation had current and accumulated E&P of $500,000 at December 31, year 1.On December 31, the company made a distribution of land to its sole shareholder, William Roy.The land's fair market value was $100,000 and its tax and E&P basis to Tar Heel was $25,000.William assumed a mortgage attached to the land of $10,000.The tax consequences of the distribution to William in year 1 would be:

• A)$100,000 dividend and a tax basis in the land of $100,000.
• B)$100,000 dividend and a tax basis in the land of $90,000.
• C)Dividend of $90,000 and a tax basis in the land of $100,000.
• D)Dividend of $90,000 and a tax basis in the land of $90,000.

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Definitions:

Resource Scarcities

Conditions where the availability of resources is limited in comparison to the demands, leading to competition and allocation challenges.

Goal Incompatibilities

Differing objectives that are at odds with one another, making it challenging to achieve them simultaneously.

Horizontal Conflicts

Disagreements or clashes that occur between individuals or groups at the same level within an organization's hierarchy.

Premature Judgments

The formation of opinions or decisions based on insufficient or incomplete information.