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:
Cash
Physical form of currency such as coins and banknotes, representing the most liquid asset used for transactions.
Acquisition
The process by which a company purchases most or all of another company's shares to gain control of that company.
Shares
Units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends.
Business Combination
A transaction or event in which an acquirer obtains control of one or more businesses.
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