All of the stock of KB Corporation is owned by B, an individual. During the current year KB corporation distributed land to B. The land was worth $100,000 and the corporation's basis in the land was $20,000. The corporation had $200,000 in Earnings and Profits. What impact would the distribution have on B? What impact would the distribution have on the corporation?
All of the stock of KB Corporation is owned by B, an individual. During the current year KB corporation distributed land to B. The land was worth $100,000 and the corporation's basis in the land was $20,000. The corporation had $200,000 in Earnings and Profits. What impact would the distribution have on B? What impact would the distribution have on the corporation?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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All of the stock of KB Corporation is owned by B, an individual. During the current year KB corporation distributed land to B. The land was worth $100,000 and the corporation's basis in the land was $20,000. The corporation had $200,000 in Earnings and Profits. What impact would the distribution have on B? What impact would the distribution have on the corporation?
Expert Solution
Step 1
Here appreciated property is distributed to the single shareholder B by the KB Corporation.
During the current year when KB Corporation distributed land to Shareholder, entire gain in Sale of Property is transferred to B.as B is the only Shareholder,
KB Corporation will report the transaction as the sale of Property.
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