Puffin Corporation Makes a Property Distribution to Its Sole Shareholder

question 140

Multiple Choice

Puffin Corporation makes a property distribution to its sole shareholder, Bonnie. The property distributed is a car (basis of $30,000? fair market value of $20,000) that is subject to a $6,000 liability which Bonnie assumes. Puffin has no accumulated E & P and $30,000 of current E & P from other sources during the year. What is Puffin's E & P after taking into account the distribution of the car?

• A) $4,000
• B) $6,000
• C) $10,000
• D) $14,000
• E) None of the above

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Definitions:

Wealthy Individuals

Persons possessing substantial amounts of money, assets, or resources, significantly above the societal average.

Limited Liability Corporation

A company model that unites the advantage of pass-through taxation seen in sole proprietorships and partnerships with the limited liability protection offered by corporations.

Sole Proprietorship

A type of enterprise that is owned and run by one person, where there is no legal distinction between the owner and the business entity.

Tax Purposes

Considerations or actions taken to comply with tax laws or to optimize tax liabilities and benefits.