Taxation of business entities.

Taxation of business entities?

• Using the same facts as those presented in the question above, what is Solomon’s basis in the property he receives in the distribution, i.e. the building? 1. $10,000 2. $15,000 3. $30,000 4. $35,000 5. $50,000 CatCo Corporation, made a distribution of a piece of Land subject to a liability, to its sole shareholder Jane: FMV = $8,000, AB = $2,000, and liability (£) = $6,000. Assume that CatCo has $100,000 in Current E&P. How much gain or loss will CatCo recognize as a result of the distribution? 1. gain of $3,000 2. gain of $4,000 3. gain of $6,000 4. loss of $1,000 5. None of the above is correct Using the facts above, CatCo would have a net "distribution adjustment" to its E&P of: 1. $-0- 2. $2,000 3. $6,000 4. $8,000 5. None of the above is correct A corporation’s balance in its earnings and profits account is equivalent in amount to the balance in its retained earnings account. True False

• Answer:

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