T IncDistributed Land Used in Its Business Worth $21,000 (Basis $18,000)

question 46

Multiple Choice

T Inc.distributed land used in its business worth $21,000 (basis $18,000) to its sole shareholder, Z Corporation.The land was subject to a mortgage of $5,000.Assuming T has substantial earnings and profits, Z's dividend and basis for the property will be

• A)$21,000 dividend, $ 16,000 basis
• B)$ 16,000 dividend, $ 16,000 basis
• C)$21,000 dividend, $21,000 basis
• D)$16,000 dividend, $21,000 basis
• E)None of the above

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Definitions:

Compounded Annually

The process of calculating interest and adding it to the principal sum of a deposit or loan once per year.

Interest Rate

The rate at which interest is paid by borrowers for the use of money that they borrow from lenders.

Pension Fund

A type of investment pool typically set up by an employer to generate stable growth over the long term and provide pensions for employees when they reach the end of their working years.

Quarterly Payments

Quarterly payments are payments made four times a year, often used in the context of dividend distributions to shareholders or in loan repayments.