2. Accounting
3. heather an individual owns all of the outstanding stock in...

# Question: heather an individual owns all of the outstanding stock in...

###### Question details

Heather, an individual, owns all of the outstanding stock in Silver Corporation. Heather purchased her stock in Silver nine years ago, and her basis is $56,000. At the beginning of this year, the corporation has$76,000 of accumulated E & P and no current E & P (before considering the effect of the distributions as noted below).

Complete the following which outline the tax consequences to Heather (i.e., the amount and type of income and basis in property received) and to Silver Corporation (i.e., the gain or loss and the effect on E & P) in each of the following situations.

If an amount is zero, enter "0".

a. Silver distributes land to Heather. The land was held as an investment and has a fair market value of $54,000 and an adjusted basis of$42,000.

Heather has a dividend of $54,000 and her basis in the land is$54,000. Silver recognizes a gain of $12,000. After the distribution, the E & P beginning balance for next year is$____ of current E & P and $34,000 of accumulated E & P. b. Silver distributes land to Heather. The land was held as an investment and has a fair market value of$54,000 and an adjusted basis of $42,000. Assume that Silver Corporation has no current or accumulated E & P prior to the distribution. Heather has a dividend of$12,000 and her stock basis is $14,000. Heather's basis in the land is$54,000. Silver recognizes a gain of $12,000. After the distribution, Silver has$____ of current E & P and $____ of accumulated E & P. c. Silver distributes land to Heather. The land was held as an investment and has a fair market value of$54,000 and an adjusted basis of $42,000. Assume that the land distributed is subject to a$46,000 mortgage (which Heather assumes). Assume the corporation has $76,000 of accumulated E & P and no current E & P. Heather has a dividend of$____ and her basis in the land is $____. Silver recognizes a gain of$____. After the distribution, the E & P beginning balance for next year is $___ of current E & P and$___ of accumulated E & P.

d. Silver distributes land to Heather. Assume that the land has a fair market value of $54,000 and an adjusted basis of$62,000 on the date of the distribution. Assume the corporation has $76,000 of accumulated E & P and no current E & P. Heather has a dividend of$____ and her basis in the land is $_____. Silver realizes a loss of$____. After the distribution, the E & P beginning balance for next year is $____ of accumulated E & P. e. Instead of distributing land, assume that Silver decides to distribute equipment used in its business. The equipment has a$14,000 market value, a $1,200 adjusted basis for income tax purposes, and a$5,200 adjusted basis for E & P purposes. When the equipment was purchased four years ago, its original fair market value was $18,000. Assume the corporation has$76,000 of accumulated E & P and no current E & P.

Heather has a dividend of $____ and her basis in the equipment is$____ basis. Silver recognizes gain of $____ on the distribution. After the distribution, the E & P beginning balance for next year is$____ of current E & P and \$___ of accumulated E & P.