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:

Drive

An internal motivational state that motivates behavior towards the attainment of certain goals or the fulfillment of needs.

Associative Learning

The process by which an association between two stimuli or a behavior and a stimulus is learned, foundational to many forms of learning including classical and operant conditioning.

Mathematical Relationship

A quantifiable correlation or association between two or more variables or sets of data, often represented using equations or models.

Behavioral Prediction

The process of forecasting future behavior based on past and present observations of behavior patterns and trends.