Wills Corporation, Which Has Accumulated a Current E&P Totaling $70,000

question 60

Multiple Choice

Wills Corporation, which has accumulated a current E&P totaling $70,000, distributes land to its sole shareholder, an individual. The land has an FMV of $75,000 and an adjusted basis of $60,000. The shareholder assumes a $15,000 liability associated with the land. The transaction will have the following tax consequences.

• A)The corporation will recognize a $15,000 gain; the shareholder will recognize dividend income of $75,000.
• B)The corporation will recognize no gain; the shareholder will recognize dividend income of $75,000.
• C)The corporation will recognize a $15,000 gain; the shareholder will recognize dividend income of $60,000.
• D)The corporation will recognize no gain; the shareholder will recognize dividend income of $60,000.

---

Definitions:

Brain Damage

Brain damage refers to destruction or deterioration of brain cells and tissues, often leading to impairment in cognitive, physical, or emotional functioning.

James-Lange

A theory of emotion suggesting that emotions occur as a result of physiological reactions to events.

Acting

The art or profession of performing a role in plays, movies, or television productions.

Whistling

The act of producing a high-pitched sound by forcing air through a small hole formed by the lips, teeth, or fingers.