If an S corporation distributes appreciated property as a dividend, it must recognize gain related to the appreciation.

Name: If an S corporation distributes appreciated property as a dividend, it must recognize gain related to the appreciation.
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When an S corporation distributes appreciated property as a dividend, it must recognize gain as if the property were sold at its fair market value on the date of distribution, leading to taxable gain recognition on the appreciation.

If an S Corporation Distributes Appreciated Property as a Dividend