A Corporation Distributes Land and the Related Liability to Meg

question 20

Multiple Choice

A corporation distributes land and the related liability to Meg, its sole shareholder. The land has an FMV of $60,000 and is subject to a liability of $70,000. The corporation has current and accumulated E&P of $80,000. The corporation's adjusted basis for the property is $70,000. What effect does the transaction have on the corporation?

• A)A recognized loss of $10,000; its E&P is reduced by $70,000.
• B)A recognized loss of $10,000; its E&P is unchanged.
• C)No recognized gain or loss; its E&P is reduced by $60,000.
• D)No recognized gain or loss; its E&P is unchanged by the distribution.

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Definitions:

Tertiary Sexual Characteristics

Traits influenced by hormones that differentiate between sexes but are not directly part of the reproductive system, often developing during puberty.

Object Permanence

The realization by infants that objects still exist even when they are out of sight, sound, or touch.

Conservation

The action of preserving, protecting, or restoring the natural environment, natural ecosystems, vegetation, and wildlife.

Attention Span

The duration for which a person is able to concentrate on a particular task or activity without getting distracted.