The ABC company bought land 2 years ago for $20,000. The FMV, now is $24,000 the corporation still owes $15,000 on this purchase. The company makes a non liquidating distribution of this property to a stockholder who accepted the debt. What is the tax effect to the shareholder of receiving this distribution? A. This is no tax effect to an owner who receives a nonliquidating distribution B. Shareholder must recognize income of $9000 C. Shareholder must recognize income of $20,000 D. Shareholder must recognize income of $24,000
The ABC company bought land 2 years ago for $20,000. The FMV, now is $24,000 the corporation still owes $15,000 on this purchase. The company makes a non liquidating distribution of this property to a stockholder who accepted the debt. What is the tax effect to the shareholder of receiving this distribution? A. This is no tax effect to an owner who receives a nonliquidating distribution B. Shareholder must recognize income of $9000 C. Shareholder must recognize income of $20,000 D. Shareholder must recognize income of $24,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The ABC company bought land 2 years ago for $20,000. The FMV, now is $24,000 the corporation still owes $15,000 on this purchase. The company makes a non liquidating distribution of this property to a stockholder who accepted the debt. What is the tax effect to the shareholder of receiving this distribution?
A. This is no tax effect to an owner who receives a nonliquidating distribution
B. Shareholder must recognize income of $9000
C. Shareholder must recognize income of $20,000
D. Shareholder must recognize income of $24,000
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