Navy Corporation Has E & P of $240,000

question 140

Multiple Choice

Navy Corporation has E & P of $240,000. It distributes land with a fair market value of $70,000 (adjusted basis of $25,000) to its sole shareholder, Troy. The land is subject to a liability of $55,000 that Troy assumes. Troy has:

• A) A taxable dividend of $15,000.
• B) A taxable dividend of $25,000.
• C) A taxable dividend of $45,000.
• D) A taxable dividend of $70,000.
• E) A basis in the machinery of $55,000.

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Definitions:

Complement Rates

The relationship between two rates where the sum totals a certain whole, often used in contexts like complementary angles or probability.

Equivalent Single Discount

A single, consolidated discount rate that is equivalent in value to a series of multiple discounts applied successively.

Complement Rate

A rate equal to 100% minus the discount rate; used with the complement method in determining trade or cash discounts.

Net Price

The actual price paid for a product or service after deducting any discounts, rebates, or promotions.