A business entity has appreciated land (basis of $50,000 and fair market value of $75,000)which it is going to distribute to Craig,one of its owners.The entity has earned substantial profits during its 15 years of operations and has reinvested most of them in the business.What are the tax consequences of the distribution to the business entity and to Craig if the business entity is a(n):
Definitions:
Written Off
Refers to the accounting action of declaring that a portion of a debt or asset value is considered uncollectable or worthless.
Uncollectibles
Accounts receivable that are recognized as not being collectible, representing losses to the company.
Allowance for Doubtful Accounts
A contra-asset account that reduces the total receivables on the balance sheet by an amount estimated to be uncollectible.
Uncollectible Accounts
These are debts that cannot be collected by a business, typically due to the debtor's inability to pay.
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