ZuoTi.Pro
Question

Trolley Corp., which had earnings and profits of $500,000, made a non-liquidating distribution of property to...

Trolley Corp., which had earnings and profits of $500,000, made a non-liquidating distribution of property to its shareholders in Year 1 as a dividend in kind. This property, which had an adjusted basis of $20,000 and a fair market value of $30,000 at the date of distribution, did not constitute assets used in the active conduct of Trolley’s business. How much gain did Trolley recognize on this distribution?

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Trolley corporation has to recognize gain upto the difference between fair market value and book value. As asset is not part of active conduct of business. It will be capital gain and not ordinary gain for trolley corporation.

Gain recognize = fair market value - book value

$30,000-$20,000.

$10,000.

0 0
Add a comment
Know the answer?
Add Answer to:
Trolley Corp., which had earnings and profits of $500,000, made a non-liquidating distribution of property to...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 26. Identify which of the following statements is true. A) A liquidating distribution of property other...

    26. Identify which of the following statements is true. A) A liquidating distribution of property other than a disqualified property that is made ratably to all shareholders (based on their stockholdings) will permit the recognition of loss on the portion of the distribution that is made to a related person. B) A subsidiary corporation can recognize losses on distributions to either the parent corporation or minority shareholders in a Sec. 332 liquidation. C) Section 336 prevents recognition of a loss...

  • XYZ Corporation distributed to its shareholders a total of $30,000 in cash plus property that had...

    XYZ Corporation distributed to its shareholders a total of $30,000 in cash plus property that had a fair market value of $80,000 and a basis of $60,000. The corporation’s earnings and profits were $100,000 on the last day of the year in which the distribution was made after taking into effect the impact on the corporation’s earning and profits of the gain recognized on the distribution (but before reducing earnings and profits by the fair market value of the distribution)....

  • — 3. In the current year, Warbler Corporation (E&P of $250,000) made the following property distributions...

    — 3. In the current year, Warbler Corporation (E&P of $250,000) made the following property distributions to its shareholders (all corporations): Fair Market Adjusted Basis Value Pink Corporation stock (held for investment) $150,000 $120,000 Non-LIFO inventory 80,000 110,000 Warbler Corporation is not a member of a controlled group. As a result of the distribution: a. The shareholders have dividend income of $200,000. b. The shareholders have dividend income of $260,000. c. Warbler has a recognized gain of $30,000 and a...

  • 25. HolyCow Corporation is liquidated, with Sneha receiving $4,000 in money and other property having a...

    25. HolyCow Corporation is liquidated, with Sneha receiving $4,000 in money and other property having a $7,000 FMV. Sneha's basis in his HolyCow stock is $6,000. Upon liquidation, Sneha must recognize a gain of A) 0. B) $5,000. C) $8,000. D) $11,000. 26. Identify which of the following statements is true. A) A liquidating distribution of property other than a disqualified property that is made ratably to all shareholders (based on their stockholdings) will permit the recognition of loss on...

  • 1.    Bob owned a duplex used as rental property. The duplex had an adjusted basis to...

    1.    Bob owned a duplex used as rental property. The duplex had an adjusted basis to Bob of $86,000 and a fair market value of $300,000. Bob transferred the duplex to his brother, Carl, in exchange for a triplex that Carl owned. The triplex had an adjusted basis to Carl of $279,000 and a fair market value of $300,000. Two months after the exchange, Carl sold the duplex to his business associate to whom he was not related for $312,000....

  • . 1. Identify which of the following statements is true: C Corporation operating losses are deductible...

    . 1. Identify which of the following statements is true: C Corporation operating losses are deductible by the individual shareholders S Corporation operating losses are never deductible by the individual shareholders. If an S Corporation has no accumulated earnings and profits, the amount distributed to a shareholder will not increase the shareholder's basis in the stock If a C Corporation does not distribute its income to its shareholders, double taxation of the income will occur. 2. The adjusted basis of...

  • 22. Under a plan of complete liquidation, Cain Corporation distributes land (not a property) with an...

    22. Under a plan of complete liquidation, Cain Corporation distributes land (not a property) with an adjusted basis of $410,000 and an FMV of $300,000 for all Gary's stock. Gary's basis in his 10% interest in the Cain stock is $250.000. Find Gary's basis in the land and Cain Corporation's recognized gain or loss. A) Recognized Gain/Loss $110,000 loss Recognized Gain/Loss $110,000 loss Basis $300,000 B) Basis $250,000 C) Basis $300,000 D) Basis $250,000 Recognized Gain/Loss SO Recognized Gain/Loss SO...

  • Question 1 Which of the following is an incorrect statement regarding the tax consequences of a...

    Question 1 Which of the following is an incorrect statement regarding the tax consequences of a § 306 stock disposition? In a sale of § 306 stock, the shareholder generally recognizes ordinary income equal to the fair market value of the preferred stock on the date it was acquired in the stock dividend. No loss is recognized on a sale of § 306 stock. The issuing corporation’s E & P is not reduced by a sale of § 306 stock....

  • 3. Corporation K distributed a parcel of real estate to a shareholder that had an adjusted...

    3. Corporation K distributed a parcel of real estate to a shareholder that had an adjusted basis to the corporation of $50,000 and a fair market value of $75,000. The property was subject to a mortgage of $80,000, which was assumed by the shareholder. What is Corporation K's recognized gain (or loss) on the distribution to the shareholder? A. $(5,000) B. $0 C. $25,000 D. $30,000 bent used in its business to its sole shareholder Mr. B for $13,000.

  • Accounting

    Zane, an individual, owns all of the outstanding common stock in Sturdley Utilities Corporation. Zane purchased his Sturdley stock seven years ago and his basis is $8,000. At the beginning of the current year, Sturdley had $25,000 of accumulated earnings and profits and no current earnings and profits. Determine the tax consequences to Zane and Sturdley in each of the following alternative situations:(a) Sturdley distributes inventory ($20,000 fair market value; $11,000 basis) to Zane.(b) Same as (a), above, except that,...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT