Purple Corporation Makes a Property Distribution to Its Sole Shareholder,Paul

question 98

Multiple Choice

Purple Corporation makes a property distribution to its sole shareholder,Paul.The property distributed is a house (fair market value of $189,000; basis of $154,000) that is subject to a $245,000 mortgage that Paul assumes.Before considering the consequences of the distribution,Purple's current E & P is $35,000 and its accumulated E & P is $140,000.Purple makes no other distributions during the current year.What is Purple's taxable gain on the distribution of the house?

• A)$0
• B)$21,000
• C)$35,000
• D)$91,000
• E)None of the above

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Definitions:

Accommodation

Adjustments or changes made to assist someone in a specific context, often pertaining to services or facilities for individuals with disabilities.

Acceptance

The act of agreeing to the terms of an offer, which then creates a binding contract.

Tractor-Trailer Rigs

Large vehicles commonly used for commercial transportation, consisting of a tractor unit that tows one or more trailers.

Stated Price

The price that is explicitly mentioned or listed as part of a transaction or contract.