Puffin Corporation makes a property distribution to its sole shareholder, Bonnie. The property distributed is a car (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 year. What is Puffin's E & P after taking into account the distribution of the car?
A) $4,000
B) $6,000
C) $10,000
D) $14,000
E) None of these.

Question

Quizplus · Accepted Answer

The Answer of Puffin Corporation makes a property distribution to its sole shareholder, Bonnie. The property distributed is a car (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 year. What is Puffin's E & P after taking into account the distribution of the car?
A) $4,000
B) $6,000
C) $10,000
D) $14,000
E) None of these.

Puffin Corporation Makes a Property Distribution to Its Sole Shareholder