(3) ABC Corporation distributes a building to Green, an individual and fifty (50) percent shareholder. The building has a FMV of $50,000 and an adjusted basis of $32,000. The building was encumbered by a $20,000 liability at the time of its distribution to Green. Without considering the distribution of the building to Green, ABC Corporation had earnings and profits of $26,500. Green adjusted basis in his interest in ABC Corporation was equal to $15,000. (a) What is the amount of the section 301 distribution to Green? (b) What is Green's basis in the building following its distribution to Green? (c) What is the amount of gain recognized by ABC Corporation as a result of the distribution of the building to Green? (d) What is the character of the distribution to Green and what is the amount of ABC's earnings and profits following the distribution?

(3) ABC Corporation distributes a building to Green, an individual and fifty (50) percent shareholder. The building has a FMV of $50,000 and an adjusted basis of $32,000. The building was encumbered by a $20,000 liability at the time of its distribution to Green. Without considering the distribution of the building to Green, ABC Corporation had earnings and profits of $26,500. Green adjusted basis in his interest in ABC Corporation was equal to $15,000. (a) What is the amount of the section 301 distribution to Green? (b) What is Green's basis in the building following its distribution to Green? (c) What is the amount of gain recognized by ABC Corporation as a result of the distribution of the building to Green? (d) What is the character of the distribution to Green and what is the amount of ABC's earnings and profits following the distribution?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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