Cavalier Corporation Had Current and Accumulated E&P of $500,000 at December

question 22

Multiple Choice

Cavalier Corporation had current and accumulated E&P of $500,000 at December 31 year 1. On December 31, the company made a distribution of land to its sole shareholder, Tom Jefferson. The land's fair market value was $200,000 and its tax and E&P basis to Cavalier was $50,000. The tax consequences of the distribution to Cavalier in year 1 would be:

• A) No gain recognized and a reduction in E&P of $200,000
• B) $150,000 gain recognized and a reduction in E&P of $200,000
• C) $150,000 gain recognized and a reduction in E&P of $50,000
• D) No gain recognized and a reduction in E&P of $50,000

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.