C:4-36 Distribution of Depreciable Property. On May 15 of the current year, Quick Corporation distributes...
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C: Distribution of Depreciable Property. On May of the current year, Quick Corporation distributes to its shareholder Calvin a building having a $ FMV and used in Quick's business. The building originally cost $ Quick claimed $ of straightline depreciation, so that the adjusted basis of the building on the date of distribution for taxable income purposes is $ The adjusted basis of the building for E&P purposes is $ The building is subject to an $ mortgage, which Calvin assumes. Quick has an E&P balance exceeding the amount distributed and is subject to a marginal tax rate.
a What are the amount and character of the income Calvin recognizes as a result of the distribution?
b What is Calvin's basis in the building?
c What are the amount and character of Quick's gain or loss as a result of the distribution?
d What effect does the distribution have on Quick's E&P
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