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

question 67

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 $175,000.
• B) $150,000 gain recognized and a reduction in E&P of $175,000.
• C) No gain recognized and a reduction in E&P of $200,000.
• D) $150,000 gain recognized and a reduction in E&P of $200,000.

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Definitions:

Near Future

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Ironic Processing

The idea that the more we try not to think about something, the more those thoughts enter our mind and distract us from other things.

Distract Us

Activities or stimuli that divert attention away from a primary task or focus.

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Guidance or instructions on how to proceed, or the course along which something moves.