Swan Corporation Makes a Property Distribution to Its Sole Shareholder

question 120

Multiple Choice

Swan Corporation makes a property distribution to its sole shareholder, Matthew. The property distributed is a cottage (fair market value of $135,000; basis of $110,000) that is subject to a $175,000 mortgage that Matthew assumes.Before considering the consequences of the distribution, Swan's current E & P is $25,000 and its accumulated E & P is 100,000. Swan makes no other distributions during the current year. What is Swan's taxable gain on the distribution of the cottage?

• A)$0.
• B)$15,000.
• C)$25,000.
• D)$65,000.
• E)None of the above.

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Definitions:

VALS

A psychographic method used to categorize consumers into groups based on variables such as motivations and resources, aiding in understanding consumer behavior.

Geodemographic Segmentation

involves dividing a market into segments based on the geographical location and demographic characteristics of the consumers.

Psychographics

The study and classification of people based on their attitudes, aspirations, and other psychological criteria, primarily used in marketing.

Target Customers

A specific group of consumers at whom a company aims its products and services, identified by characteristics like age, gender, income, and interests.