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

question 63

Multiple Choice

Tar Heel Corporation had current and accumulated E&P of $500,000 at December 3120X3. 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 $90,000.
• B) Dividend of $90,000 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) $100,000 dividend and a tax basis in the land of $100,000.

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Definitions:

American Psychological Association

A professional organization representing psychologists in the United States, dedicated to advancing psychology as a science, profession, and as a means of promoting health and human welfare.

Deception

The act of misleading or tricking someone by concealing or misrepresenting the truth.

Debriefed

The procedure where research participants are given full information about the purpose and procedures of the study after their participation.

Painful Stimuli

External or internal factors that cause discomfort or pain, activating the nervous system's response to potential or actual harm.