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On May 10 of the current year, Newport Corporation distributes to its shareholder Helen $22,000 in cash and land (a capital a
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Answer #1

Answer

Amount of distribution = $ 22,000

Character of distribution = Dividend

Explanation:

When a property is distributed by a corporation to its shareholders, the value of the property is considered to be its fair Market value less any mortgage against it.

So, Diviednd = $ 30,000 - $ 55,000 = ($ 25,000)

As value canot be nagative, it is taken as zero. Only cash of $ 22,000 is considered.

In case of any doubt, please comment.

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