Green, Inc., a C corporation, distributes a tract of land held as an investment (FMV = $500,000, basis = $220,000) and its mortgage of $550,000 to Susan at the end of the year. Green, Inc. has a current E&P of $190,000 for the year and started the year with an accumulated E&P of $60,000. Green's marginal tax rate is 21%. Susan has an individual marginal tax rate of 33% and both a dividend and a long-term capital gains tax rate of 15%. Susan owns 200 of Green's 1,000 outstanding shares, and her basis in her Green stock is $20,000. Susan has held her stock for two years. The distribution does not qualify as a stock redemption but would be classified as a qualified dividend.
What is Green's recognized gain on the distribution?
What is the increase in Green's tax liability as a result of the distribution?
What is the amount of Susan's distribution?
How much of the distribution is classified as a dividend?
How much of the distribution is classified as a return of capital?
How much of the distribution is taxed as a capital gain?
What is the increase in Susan's tax liability as a result of the distribution?
What is Green's ending E&P (after the distribution)?
What is Susan's basis in the land?
What is Susan's ending basis in her Green stock?