(2) XYZ Corporation distributes a building to Smith, an individual and fifty (50) percent shareholder. The building has a FMV of $50,000 and an adjusted basis of $68,000. Without considering the distribution of the building to Smith, XYZ Corporation had earnings and profits of $26,500. Smith adjusted basis in his interest in XYZ Corporation was equal to $15,000. (a) What is the amount of the section 301 distribution to Smith? (b) What is Smith's basis in the building following its distribution to Smith? (c) What is the amount of gain recognized by XYZ Corporation as a result of the distribution of the building to Smith? (d) What is the character of the distribution to Smith and what is the amount of XYZ's earnings and profits following the distribution?

(2) XYZ Corporation distributes a building to Smith, an individual and fifty (50) percent shareholder. The building has a FMV of $50,000 and an adjusted basis of $68,000. Without considering the distribution of the building to Smith, XYZ Corporation had earnings and profits of $26,500. Smith adjusted basis in his interest in XYZ Corporation was equal to $15,000. (a) What is the amount of the section 301 distribution to Smith? (b) What is Smith's basis in the building following its distribution to Smith? (c) What is the amount of gain recognized by XYZ Corporation as a result of the distribution of the building to Smith? (d) What is the character of the distribution to Smith and what is the amount of XYZ's earnings and profits following the distribution?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter12: Nonrecognition Transactions

Section: Chapter Questions

Problem 21P

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