Purple Corporation Makes a Property Distribution to Its Sole Shareholder,Paul

question 98

Multiple Choice

Purple Corporation makes a property distribution to its sole shareholder,Paul.The property distributed is a house (fair market value of $189,000; basis of $154,000) that is subject to a $245,000 mortgage that Paul assumes.Before considering the consequences of the distribution,Purple's current E & P is $35,000 and its accumulated E & P is $140,000.Purple makes no other distributions during the current year.What is Purple's taxable gain on the distribution of the house?

• A)$0
• B)$21,000
• C)$35,000
• D)$91,000
• E)None of the above

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Definitions:

Three-Phase Transformers

Transformers designed to handle three-phase electric power, widely used in power transmission systems to step up or step down voltages.

Single-Phase Motors

Electric motors that operate with a single-phase power supply, commonly used in household appliances and light industry.

Line Current

The current that flows through the conductors of an electrical power system, such as in the power lines delivering electricity to consumers.

Phase Current

The current flowing through one phase circuit in a polyphase system, which could vary in magnitude and phase angle compared to currents in other phases.