Tar Heel Corporation Had Current and Accumulated E&P of $500,000

question 31

Multiple Choice

Tar Heel Corporation had current and accumulated E&P of $500,000 at December 31 20X3. On December 31, the company made a distribution of land to its sole shareholder, William Roy. The land's fair market value was $100,000 and its tax and E&P basis to Tar Heel was $25,000. William assumed a mortgage attached to the land of $10,000. The tax consequences of the distribution to William in 20X3 would be:

• A)$100,000 dividend and a tax basis in the land of $100,000.
• B)$100,000 dividend and a tax basis in the land of $90,000.
• C)Dividend of $90,000 and a tax basis in the land of $100,000.
• D)Dividend of $90,000 and a tax basis in the land of $90,000.

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Definitions:

Neuroleptic Malignant Syndrome

A severe, potentially fatal reaction to antipsychotic drugs, marked by muscle rigidity, fever, altered consciousness, and autonomic dysfunction.

Autonomic Dysfunction

A condition where the autonomic nervous system (ANS) does not work properly, affecting bodily functions such as heart rate, blood pressure, and digestion.

Antipsychotic Drugs

Medications aimed at managing psychosis, including schizophrenia and bipolar disorder, by adjusting neurotransmitter levels in the brain.

Dopamine Activity

The action or function of dopamine, a neurotransmitter involved in movement, motivation, and the pleasure-reward system.