A Corporation Distributes Land and the Related Liability to Meg

question 20

Multiple Choice

A corporation distributes land and the related liability to Meg, its sole shareholder. The land has an FMV of $60,000 and is subject to a liability of $70,000. The corporation has current and accumulated E&P of $80,000. The corporation's adjusted basis for the property is $70,000. What effect does the transaction have on the corporation?

• A)A recognized loss of $10,000; its E&P is reduced by $70,000.
• B)A recognized loss of $10,000; its E&P is unchanged.
• C)No recognized gain or loss; its E&P is reduced by $60,000.
• D)No recognized gain or loss; its E&P is unchanged by the distribution.

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Definitions:

Variance

A measure of how much values in a data set differ from the mean of the set.

Cohen's D

Cohen's d is a statistic used to quantify the difference between two means, measured in standard deviations.

Cohen's D

A measure of effect size indicating the standardized difference between two means.

Standard Deviation Units

Units measured in terms of the number of standard deviations away from the mean of the distribution.