This Year A&S Disposal Corp

question 35

Multiple Choice

This year A&S Disposal Corp.distributed land that it had used as a garbage site to its sole shareholder, J.The land was worth $30,000 (basis $10,000) and was subject to a $16,000 mortgage, which J assumed.The corporation had $200,000 of earnings and profits.Ignoring any taxes that may or may not arise on the distribution, the net effect of the distribution on earnings and profits of A&S will cause it to

• A)Increase by $20,000
• B)Decrease by $10,000
• C)Increase by $6,000
• D)Increase by $10,000
• E)None of the above