Special Motors Inc. has E&P of $53,000. It distributes a building to the individual sole shareholder. The building has an adjusted basis of $17,000 and a fair market value of $54,000 and is subject to a mortgage of $31,000.
a. What is the character and amount of any gain or loss recognized by Special Motors?
b. What is the amount of the dividend?
c. What is Special Motor’s E&P after the distribution?
d. What is the shareholder’s basis in the building?