4. A tract of land is distributed to Martha Moore as a dividend. Its basis immediately prior to the distribution was $40,000, its value is $80,000, and it is subject to a mortgage of $55,000. The following statements concerning the distribution are all false except: OA. The shareholder's basis in the
4. A tract of land is distributed to Martha Moore as a dividend. Its basis immediately prior to the distribution was $40,000, its value is $80,000, and it is subject to a mortgage of $55,000. The following statements concerning the distribution are all false except: OA. The shareholder's basis in the
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![4. A tract of land is distributed to Martha Moore as a dividend. Its basis immediately prior to the distribution was $40,000, its value is
$80,000, and it is subject to a mortgage of $55,000. The following statements concerning the distribution are all false except:
OA. The shareholder's basis in the land is $80,000, its fair market value.
OB. The distributing corporation's realized gain of $40,000 is recognized to the extent of the $15,000.
OC. E&P is increased by $15,000 (liability less basis), decreased by $40,000 and increased by the liability.
D. The net adjustment to the E&P account is $40,000, the amount of the realized gain.
4](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F743994a4-6a8a-47e8-9d40-8c6ff010100b%2Ff1471cb3-0ce6-4585-bcf5-216fe5fb5a89%2Fomwdwqb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4. A tract of land is distributed to Martha Moore as a dividend. Its basis immediately prior to the distribution was $40,000, its value is
$80,000, and it is subject to a mortgage of $55,000. The following statements concerning the distribution are all false except:
OA. The shareholder's basis in the land is $80,000, its fair market value.
OB. The distributing corporation's realized gain of $40,000 is recognized to the extent of the $15,000.
OC. E&P is increased by $15,000 (liability less basis), decreased by $40,000 and increased by the liability.
D. The net adjustment to the E&P account is $40,000, the amount of the realized gain.
4
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