M&E Corporation Has Two Shareholders, Marco and Edward

question 14

Multiple Choice

M&E Corporation has two shareholders, Marco and Edward.M&E Corporation has current E&P of $50,000 and a deficit in accumulated E&P of $40,000.M&E Corporation is in the 25% marginal tax bracket.M&E Corporation distributes investment land to these shareholders.The land distributed to Marco has a FMV of $30,000 and a basis to M&E Corporation of $24,000.The land distributed to Edward has a FMV of $30,000 and a basis to M&E Corporation of $26,000.Marco's basis for his stock is $2,000.Edward's basis for his stock is $1,000.How much gain, if any, does M&E Corporation recognize on the distribution of this land to its shareholders?

• A)$0
• B)$4,000
• C)$6,000
• D)$10,000

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Definitions:

Public Affairs

A field focused on building and maintaining relationships between an organization and the public, including handling PR, communication strategies, and community engagement.

Stakeholders

People or organizations who have a “stake” in a company/organization, including employees, voters, government agencies and elected officials, customers, prospective employees, as well as customers and other similar individuals.

Chief Business Officer

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General theory of PR that explains characteristics of excellent communications.