Apricot Corporation distributes property ($125,000 basis and $150,000 fair market value) to its sole shareholder, Ellie. The property is subject to a liability of $200,000, which Ellie assumes. Apricot has E & P of $325,000 prior to the distribution. a)What gain, if any, does Apricot recognize on the distribution? What is Apricot's accumulated E & Pat the start of the following year? b. What is the amount of Ellie's dividend income on the distribution? What is her basis in the property received?
Apricot Corporation distributes property ($125,000 basis and $150,000 fair market value) to its sole shareholder, Ellie. The property is subject to a liability of $200,000, which Ellie assumes. Apricot has E & P of $325,000 prior to the distribution. a)What gain, if any, does Apricot recognize on the distribution? What is Apricot's accumulated E & Pat the start of the following year? b. What is the amount of Ellie's dividend income on the distribution? What is her basis in the property received?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Apricot Corporation distributes property ($125,000 basis and $150,000 fair market value) to its sole shareholder, Ellie. The property is subject to a liability of $200,000, which
Ellie assumes. Apricot has E & P of $325,000 prior to the distribution. a)What gain, if any, does Apricot recognize on the distribution? What is Apricot's accumulated E & P at
the start of the following year? b. What is the amount of Ellie's dividend income on the distribution? What is her basis in the property received?
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