Tar Heel Corporation Had Current and Accumulated E&P of $500,000

question 19

Multiple Choice

Tar Heel Corporation had current and accumulated E&P of $500,000 at December 31, year 1.On December 31, the company made a distribution of land to its sole shareholder, William Roy.The land's fair market value was $100,000 and its tax and E&P basis to Tar Heel was $25,000.William assumed a mortgage attached to the land of $10,000.The tax consequences of the distribution to William in year 1 would be:

• A)$100,000 dividend and a tax basis in the land of $100,000.
• B)$100,000 dividend and a tax basis in the land of $90,000.
• C)Dividend of $90,000 and a tax basis in the land of $100,000.
• D)Dividend of $90,000 and a tax basis in the land of $90,000.

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Definitions:

Alpha

The threshold value used in hypothesis testing that determines the critical region for rejecting the null hypothesis.

Cramér's V

A measure of association between two nominal or categorical variables, providing an index value between 0 and 1.

Null Hypothesis

A hypothesis that assumes no significant difference or effect exists between certain datasets or variables.

Level of Significance

The threshold chosen by the researcher below which a p-value indicates that the observed result is statistically unlikely to have occurred by chance.