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Global Corporation distributed property with an $850,000 fair market value and a $415,000 adjusted basis to one of its shareholders
Global Corporation distributed property with an $850,000 fair market value and a $415,000 adjusted basis to one of its shareholders. The property was subject to a $230,000 mortgage, which the shareholder assumed. Global has ample E & P to cover any distribution made during the year. What is the amount of the shareholder's dividend income on the distribution? What is the shareholder's basis in the property received?
Expert Solution
Shareholder's dividend income is as follows;
shareholder's dividend income= Fair market value of distributed property- Mortgage on property
= 850000- 230000
= 620000
Shareholder's basis in the property received is as follows:
Basis in the property= Fair market value of distributed property
= 850000
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