Purple Corporation Makes a Property Distribution to Its Sole Shareholder

question 25

Multiple Choice

Purple Corporation makes a property distribution to its sole shareholder, Kyung. The property distributed is a house (fair market value of $189,000; basis of $154,000) that is subject to a $245,000 mortgage that Kyung assumes. Before considering the consequences of the distribution, Purple's current E & P is $35,000 and its accumulated E & P is $140,000. Purple makes no other distributions during the current year. What is Purple's taxable gain on the distribution of the house?

• A) $0
• B) $21,000
• C) $35,000
• D) $91,000
• E) None of these.

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Definitions:

Consumer Behaviour

The study of individuals, groups, or organizations and their processes in selecting, securing, using, and disposing of products, services, experiences, or ideas to satisfy needs and desires.

Attitude Problem

A negative or uncooperative outlook or disposition towards ideas, tasks, or people, often resulting in difficult social interactions or workplace dynamics.

Ego-Defensive Function

A psychological defense mechanism in which an individual adopts certain behaviors or attitudes to protect their self-esteem or ego from perceived threats.

Utilitarian Function

Refers to the practical or useful aspects of a product or service that satisfy basic needs and functionalities for a user.