Distributions
Response to the following problem:
A C corporation began the year with E&P of $12,000. During the year it added $8,000 of E&P before the corporation makes any distributions for the year. The corporation has one shareholder, whose basis in the stock prior to any distributions for the year was $9,000.
a. Describe the tax consequences to both the corporation and the shareholder if the corporation distributes $24,000 cash during the year.
b. Same as in Part a., except that the corporation distributes $34,000 cash.
c. Same as Part a., except that the corporation distributes land worth $24,000 ($17,000 adjusted basis to the corporation).