! Required information [The following information applies to the questions displayed below.] Carolina Corporation, an S corporation, has no corporate Earnings and profit from its years as a C corporation. At the end of the year, it distributes a small parcel of land to its sole shareholder, Shadiya. The fair market value of the parcel is $70,000, and its tax basis is $40,000. Shadiya's basis in her stock is $14,000. Assume Carolina Corporation reported $0 taxable income before considering the tax consequences of the distribution. Note: Leave no answer blank. Enter zero if applicable. b. How much gain must Shadiya recognize (if any) as a result of the distribution, what is her basis in her Carolina Corporation stock after the distribution, and what is her basis in the land? Answer is complete but not entirely correct. Gain recognized $ 30,000 × Stock basis $ 0 Land basis $ 70,000
! Required information [The following information applies to the questions displayed below.] Carolina Corporation, an S corporation, has no corporate Earnings and profit from its years as a C corporation. At the end of the year, it distributes a small parcel of land to its sole shareholder, Shadiya. The fair market value of the parcel is $70,000, and its tax basis is $40,000. Shadiya's basis in her stock is $14,000. Assume Carolina Corporation reported $0 taxable income before considering the tax consequences of the distribution. Note: Leave no answer blank. Enter zero if applicable. b. How much gain must Shadiya recognize (if any) as a result of the distribution, what is her basis in her Carolina Corporation stock after the distribution, and what is her basis in the land? Answer is complete but not entirely correct. Gain recognized $ 30,000 × Stock basis $ 0 Land basis $ 70,000
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 54P
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Required information
[The following information applies to the questions displayed below.]
Carolina Corporation, an S corporation, has no corporate Earnings and profit from its years as a C corporation. At the end
of the year, it distributes a small parcel of land to its sole shareholder, Shadiya. The fair market value of the parcel is
$70,000, and its tax basis is $40,000. Shadiya's basis in her stock is $14,000. Assume Carolina Corporation reported $0
taxable income before considering the tax consequences of the distribution.
Note: Leave no answer blank. Enter zero if applicable.
b. How much gain must Shadiya recognize (if any) as a result of the distribution, what is her basis in her Carolina Corporation stock
after the distribution, and what is her basis in the land?
Answer is complete but not entirely correct.
Gain recognized
$
30,000 ×
Stock basis
$
0
Land basis
$
70,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6d42e276-647a-4bd0-871e-7ef73ee6f580%2F067898f1-f2ba-4131-a7fb-bca35d061937%2Fvhkkf5j_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[The following information applies to the questions displayed below.]
Carolina Corporation, an S corporation, has no corporate Earnings and profit from its years as a C corporation. At the end
of the year, it distributes a small parcel of land to its sole shareholder, Shadiya. The fair market value of the parcel is
$70,000, and its tax basis is $40,000. Shadiya's basis in her stock is $14,000. Assume Carolina Corporation reported $0
taxable income before considering the tax consequences of the distribution.
Note: Leave no answer blank. Enter zero if applicable.
b. How much gain must Shadiya recognize (if any) as a result of the distribution, what is her basis in her Carolina Corporation stock
after the distribution, and what is her basis in the land?
Answer is complete but not entirely correct.
Gain recognized
$
30,000 ×
Stock basis
$
0
Land basis
$
70,000
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