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:

DSM-5

The Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, a comprehensive classification and diagnostic tool for mental disorders used by mental health professionals.

Clusters

Groups of objects or individuals that are close to each other or share common characteristics, forming a distinct segment apart from others.

Schizophrenic Patients

Individuals diagnosed with schizophrenia, a mental disorder characterized by distorted thinking, perceptions, emotions, language, sense of self, and behavior.

Ventricles

Hollow chambers within the brain that produce and store cerebrospinal fluid, which cushions and protects the brain and spinal cord.