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

question 64

Multiple Choice

Cavalier 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, Tom Jefferson. The land's fair market value was $200,000 and its tax and E&P basis to Cavalier was $50,000. The tax consequences of the distribution to Cavalier 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 $50,000.
• D)No gain recognized and a reduction in E&P of $50,000.

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Definitions:

Soil Fertility

The capability of soil to provide essential nutrients to plants in adequate amounts for growth, reproduction, and overall health.

Microorganism Diversity

The variety and variability among microorganisms (bacteria, viruses, fungi, and protozoa) within their environments.

Peanut Plant

A legume crop grown primarily for its edible seeds, which are enclosed in a pod.

Winged Bean

A tropical legume plant native to Papua New Guinea, known for its edible leaves, flowers, roots, and pods.