Malcolm Receives a Liquidating Distribution of Land with a Fair $\begin{array}{llcc} \text { Malcolm } & \text { Blithe } \\\end{array}$

question 34

Short Answer

Malcolm receives a liquidating distribution of land with a fair market value of $14,000 and a basis of $19,000 from Blithe Corporation, an S corporation. Malcolm's basis in the stock is $21,000. What must Malcolm and Blithe report as income (loss) from the property distribution? $\begin{array}{llcc} \text { Malcolm } & \text { Blithe } \\\end{array}$
A) $\$-0- \quad \$-0-$
B) $\$(2,000) \quad \$(5,000)$
C) $\$(7,000) \quad \$-0-$
D) $\$(7,000) \quad \$(5,000)$ ?

• A) \(\$-0- \quad \$-0-\)
• B) \( \$(2,000) \quad \$(5,000) \)
• C)\( \$(7,000) \quad \$-0- \)
• D)\( \$(7,000) \quad \$(5,000) \) ?

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Definitions:

Business Transaction

An economic event or activity that changes the financial position or the assets and liabilities of a company.

Utility Expenses

Costs incurred by a business or individual for basic utilities such as water, electricity, gas, and sewage services.

Owner Investment

Capital put into a business by the owner(s) separate from earnings or loans, typically to start or grow the business.

Owner's Capital

Owner's Capital represents the total equity or net worth contributed by the owners or shareholders of a company, plus retained earnings.