Question

Questions 17-20 are based on the following information:

On 1/1/x2, P Co. had accumulated E&P totaling $10,000. During 20x2, P Co. made the following distributions to its shareholders:

J - $25,000 cash on 9/7/x2
M - Property (FMV $75,000; Basis $65,000) on 11/3/x2

J's basis in his P Co. stock is $10,000.
M's basis in his P Co. stock is $30,000.
P Co. had current E&P from operations in 20x2 totaling $30,000. 

 

Flag question: Question 17

Question 172 pts

P Co.s recognized gain or loss on the distribution is

 

Group of answer choices

0

None of these.

$75,000

$10,000

 

Flag question: Question 18

Question 182 pts

J should characterize the distribution as follows:

 

Group of answer choices

$20,000 dividend; $5,000 return of capital

None of these.

$25,000 dividend

$17,500 dividend; $7,500 return of capital

 

Flag question: Question 19

Question 192 pts

M should characterize the distribution as follows: 

Group of answer choices

$75,000 dividend

$30,000 dividend; $30,000 return of capital; $15,000 capital gain

$22,500 dividend; $30,000 return of capital; $22,500 capital gain

None of these.

 

Flag question: Question 20

Question 202 pts

If the property distributed was subject to a $90,000 mortgage, under Code § 311, P Co.'s gain or loss on the distribution is

Group of answer choices

$10,000 gain

None of these.

0

$25,000 gain