Montclair Corporation Had Current and Accumulated E&P of $500,000 at December

question 4

Multiple Choice

Montclair Corporation had current and accumulated E&P of $500,000 at December 31, 20X3. On December 31, the company made a distribution of land to its sole shareholder, Molly Pitcher. The land's fair market value was $200,000 and its tax and E&P basis to Montclair was $50,000. Molly assumed a liability of $25,000 attached to the land. The tax consequences of the distribution to Montclair in 20X3 would be:

• A)No gain recognized and a reduction in E&P of $200,000.
• B)$150,000 gain recognized and a reduction in E&P of $200,000.
• C)$150,000 gain recognized and a reduction in E&P of $175,000.
• D)No gain recognized and a reduction in E&P of $175,000.

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Definitions:

Null Hypothesis

A default hypothesis in statistical inference that suggests no statistical significance or effect exists within a set of observations.

Significance Level

A threshold in hypothesis testing that determines the probability of rejecting the null hypothesis when it is actually true, commonly denoted as alpha (α).

One-Way ANOVA

A statistical test used to compare the means of three or more independent groups to determine if there is a significant difference among them, based on one independent variable.

F Statistic

A statistical measure that determines the ratio of variance between groups to variance within groups in the context of ANOVA tests.