Carolina Corporation, an S corporation, has nocorporate Earnings and profit from its years as aC corporation. At the end of the year, it distributesa small parcel of land to its sole shareholder,Shadiya. The fair market value of the parcel is$98,000, and its tax basis is $60,000. Shadiya'sbasis in her stock is $24,000. Assume CarolinaCorporation reported $0 taxable income beforeconsidering the tax consequences of thedistribution.b. How much gain must Shadiya recognize (ifany) as a result of the distribution, what is herbasis in her Carolina Corporation stock after thedistribution, and what is her basis in the land?

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Answered: Carolina Corporation, an S corporation,…

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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