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.

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Definitions:

Blood Sugar

The concentration of glucose in the blood, an important indicator of metabolic health and diabetes management.

Thyroid Hormones

Chemical substances produced by the thyroid gland, essential for regulating the body's metabolism, energy, and growth.

Cortisol

A steroid hormone produced by the adrenal glands, involved in the body's stress response as well as metabolism and immune function.

Glucagon

A hormone produced by the pancreas that raises blood glucose levels, acting as an important counter-regulatory hormone to insulin.