Irn/takeAssignment/takeAssignmentMain.dožnvoker-assignments&itakeAssignmentSessi

Question

Irn/takeAssignment/takeAssignmentMain.dožnvoker-assignments&itakeAssignmentSessionlocator-assignment-take..; Puffin Corporation makes a property distribution to its sole shareholder, Bonnie. The prope (basis of $30,000, fair market value of $20,000) that is subject to a $6,000 liability which Bonnie assumes Puffin has no accumulated E &P; and $30,000 of current E & P from other sources during the y Puffin's E & P after taking into account the distribution of the car? Oa. $4,000 ear. What is b. $14,000 c. $10,000 d. $6,000 e. None of these choices are correct.

Explanation / Answer

Solution: $6,000

Working: E&P is reduced by the greater of the adjusted basis or the fair market value of the property distributed, net of any liabilities. While computations of E&P the losses occured on distribution are not taken into consideration. Consequently, Puffin’s current E & P of $30,000 is decreased by $24,000 ($30,000 basis of the car minus the liability amount of the liability). After the distribution is $6,000, the remaining current E&P is $6,000

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