An S Corporation Distributes Land with a Basis of $60,000

question 29

Multiple Choice

An S corporation distributes land with a basis of $60,000 and a FMV of $90,000 to its shareholders. The tax results of the distribution will be

• A)no gain to the corporation or to the shareholders.
• B)$30,000 of gain recognized by the S corporation and no pass through to the shareholders.
• C)no gain recognized by the corporation but $30,000 of gain recognized by the shareholders.
• D)$30,000 of gain recognized by the S corporation which is passed through to the shareholders.

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Definitions:

Pro Rata Basis

A method of allocating amounts or resources proportionally, according to a specific rate, percentage, or share.

Titled To

The legal right to own, possess, or hold a particular property or position.

Accounting Firm

A business specialized in providing professional services related to accounting, including auditing, tax preparation, and financial consulting.

Accounting Business

An enterprise that provides financial services such as bookkeeping, tax preparation, and financial auditing to individuals or other businesses.