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

question 31

Multiple Choice

Tar Heel Corporation had current and accumulated E&P of $500,000 at December 31 20X3. 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 20X3 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.

---

Definitions:

Eliminated

The act of completely removing or getting rid of something.

Online Availability

Refers to the accessibility of information, services, or products over the internet at any time.

Restatements of the Law

A set of treatises or publications that aim to distill the common law and its principles into a coherent set of statements, helping to clarify and standardize legal doctrines.

Principles of the Law

Fundamental doctrines or tenets that form the basis and framework for the application and understanding of law.