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

question 4

Multiple Choice

Montclair 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, Molly Pitcher. The land's fair market value was $200,000 and its tax and E&P basis to Montclair was $50,000. Molly assumed a liability of $25,000 attached to the land. The tax consequences of the distribution to Montclair 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 $175,000.
• D)No gain recognized and a reduction in E&P of $175,000.

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Definitions:

Anxiety-arousing Material

Content or stimuli that induces feelings of fear, worry, or unease in an individual.

Therapy

A treatment aimed at relieving or healing psychological, emotional, or behavioral issues, typically involving structured sessions with a trained professional.

Free Association

A therapeutic technique in psychoanalysis where a patient speaks freely to reveal unconscious thoughts and feelings.

Resistance

In psychology, the opposition or reluctance to discuss, remember, or acknowledge certain thoughts, feelings, or experiences during therapy.