Wills Corporation, Which Has Accumulated a Current E&P Totaling $65,000

question 71

Multiple Choice

Wills Corporation, which has accumulated a current E&P totaling $65,000, distributes land to its sole shareholder, an individual. The land has an FMV of $75,000 and an adjusted basis of $55,000. The shareholder assumes a $15,000 liability associated with the land. The shareholder will recognize

• A)$60,000 of dividend income and have a $60,000 basis in the land.
• B)$65,000 of dividend income and have a $75,000 basis in the land.
• C)$60,000 of dividend income and have a $75,000 basis in the land.
• D)$65,000 of dividend income and have a $65,000 basis in the land.

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Definitions:

Workers

Individuals engaged in any form of labor, whether employed by organizations, self-employed, or working as freelancers, contributing to the production of goods and services.

Producer Surplus

The difference between the amount a producer is paid for a good compared to the minimum amount they would be willing to accept for it, a measure of producer welfare.

Price

The sum of money needed to buy a product, service, or commodity.

Quantity

The amount or number of a material or immaterial good considered as a unit or in discrete amounts.