Cavalier Corporation Had Current and Accumulated E&P of $500,000 at December

question 64

Multiple Choice

Cavalier 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, Tom Jefferson. The land's fair market value was $200,000 and its tax and E&P basis to Cavalier was $50,000. The tax consequences of the distribution to Cavalier in 20X3 would be:

• A)No gain recognized and a reduction in E&P of $200,000.
• B)$150,000 gain recognized and a reduction in E&P of $200,000.
• C)$150,000 gain recognized and a reduction in E&P of $50,000.
• D)No gain recognized and a reduction in E&P of $50,000.

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Definitions:

Market Competition

The competitive rivalry between companies in a marketplace, where businesses vie for a larger share of consumers through pricing, product differentiation, and customer service.

Industrial Relations School

An academic field that studies employment relationships, including aspects of labor, management, and governmental roles.

Labor Markets

Economic markets that function to determine the demand and supply of labor, influencing the allocation of labor, wages, and working conditions.

Independent Employee Representation

A way for workers to have a voice in their workplace without being affiliated with a traditional union.